Linking microeconomic characteristics, entrepreneurship and community prosperity/poverty of South African towns

ABSTRACT

Four different South African groups are principally involved with research about entrepreneurship, namely groups focused on: (i) entrepreneurship, (ii) small towns, (iii) local economic development, and (iv) microeconomics of towns. There is limited cooperation between these groups, which if overcome could contribute to the reduction of community poverty in towns. Two hypotheses are examined to sketch the importance of quantified entrepreneurial knowledge: 1. New entrepreneurship, i.e. the ability to successfully start businesses of types not yet present, is linked with entrepreneurial strength in the tradable sectors of towns. 2 Entrepreneurial strength in the tradable sector reduces poverty in towns. A range of power law (log–log) relationships reflect the entrepreneurial complexity of towns and enables tests of the hypotheses. The first is rejected and the second accepted. Strength in the tradable sector of towns reduces community poverty. Greater research cooperation should be sought.

KEYWORDS:

• Tradable economic sector
• entrepreneurship
• poverty
• power laws
• quantitative methods

JEL CLASSIFICATION:

• I32
• C250
• R110

Acknowledgements

Administrative support by the Centre for Environmental Management, University of the Free State and technical assistance by Estelle Zeelie and Marie Toerien are gratefully acknowledged.

Disclosure statement

No potential conflict of interest was reported by the author(s).