A comparative analysis on the entrepreneurial ecosystem of BRICS club countries: practical emphasis on South Africa

Abstract

The effectiveness of entrepreneurial activities is not only determined by the quality of entrepreneurs but also by the ecosystem of entrepreneurship. The entrepreneurial ecosystem (EE) that nurtures low-quality “moppets” to highly impactful “gazelles” is being widely debated and on-demand in literature. This study, therefore, is aimed to advance the discussion and make a comparative analysis of the entrepreneurial ecosystem, which has been given a little attention, of BRICS club countries with an especial focus on South Africa, Brazil, and India. Various entrepreneurship-economic growth-related measures including Global Entrepreneurship Index (GEI), Global Competitiveness Index (GCI), Index Economic Freedom (IEF), and Legatum Prosperity Index (LPI) are used to compare the countries’ entrepreneurial ecosystem. Especially, the data set (2012–2018) of GEI was utilized for the analysis. According to GEI and GCI of 2018, China is leading BRICS club in terms of growth and entrepreneurial ecosystem. On the other side, LPI, IEF, and GEI put South Africa’s entrepreneurial ecosystem in a favorable position as compared to Brazil and India. South Africa performs poorly in startup skills, while both the latter ones are better and stand at the same level. This shows that South Africa’s tertiary education, coupled with low skill perception, is less effective in equipping the population to be entrepreneurs as compared to India and Brazil. Whereas Brazil and India are at their worst in internationalizing the country’s entrepreneurs and technological absorption, respectively. South Africa is more like India in product innovation and risk acceptance. On the other side, it is more like Brazil in risk capital, technological absorption, opportunity perception, and in their sluggish economic growth. Overall, South Africa (57th/140 as of 2018) is categorized among those poorly performing countries in terms of start-up skills, networking, technology absorption, human Capital, and risk capital pillars. The government of South Africa needs to primarily work on these bottle-neck pillars to improve its EE. To increase GEI by 5%, it should invest 77% of its extra resource on start-up skills, 18% on risk capital, and 5% on technology absorption. Applying GEI set up, this paper claims to have uniquely contributed to how to make a country comparison on the EE. Further empirical research can be done including all BRICS countries to bolster their development effort and on how to promote EE by tackling the underlying bottlenecks.