Indigenous Ethnicity and Entrepreneurial Success in Africa : Some Evidence from Ethiopia
Researchers have recently been asking why Asian and European minorities in Africa seem to be more successful in business than are people of indigenous ethnicity. The author draws attention to the significant disparity in business ownership and perf...
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Format: | Policy Research Working Paper |
Language: | English en_US |
Published: |
World Bank, Washington, DC
2014
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Online Access: | http://documents.worldbank.org/curated/en/2001/01/891744/indigenous-ethnicity-entrepreneurial-success-africa-some-evidence-ethiopia http://hdl.handle.net/10986/19719 |
Summary: | Researchers have recently been asking
why Asian and European minorities in Africa seem to be more
successful in business than are people of indigenous
ethnicity. The author draws attention to the significant
disparity in business ownership and performance that seems
to exist among African ethnic groups as well. After
analyzing a random selection of small to medium-size
manufacturers in Ethiopia, he finds that establishments
owned by an indigenous minority ethnic group, the Gurage,
typically perform better than those owned by other (major or
minority) groups. Other things being equal, Gurage-owned
businesses are normally large, partly because they are
bigger as start-ups and partly because they grow faster. And
yet Gurage business owners are the least educated ethnic
group in the sample. Because the size and growth rate of a
business also increases with the entrepreneur's
education, the performance of other businesses would have
been even worse if their owners hadn't been better
educated than the Gurage. Indeed, dropping education
variables from the size determination equation drastically
reduces the estimated advantage of Gurage-run businesses.
This suggests that the observed effect of ethnicity could be
indicative of intergroup differences in unmeasured ability.
More important, it means that whether or not the effect will
persist in the long run will depend on the trend in
interethnic differences in investment in education. |
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