Many developing countries have not benefited from the technological changes that have
taken place over the last 30 years. Uganda has been no exception. The country
continues to have over 30 percent of its people below the poverty line. This is despite
the appropriateness of macro economic policy and government action in many of these
countries. Even in the developed countries, slowness in growth has been attributed to
lack of enterprise rather than policy and government action. For this reason,
governments and multilateral institutions like the World Bank, have attributed the
continued poverty or the slow growth to other factors like governance, institutions but
more importantly, entrepreneurship.
Classical, and indeed neo-classical economists, did not pay much attention to
entrepreneurship as a determinant of growth and therefore this relationship has not been
explored in most of the research that has attempted to explain determinants of economic
growth. It was Schumpeter who suggested that the entrepreneur had a role in economic
growth but no empirical studies have been undertaken to verify this. Thus was until
recently when the Global Entrepreneurship Monitor (GEM) studies were initiated in
1999 led by Paul Reynolds who had done some previous research in this area. The
current GEM studies have focused on small firms and yet the model has existing large
firms. This study identifies this gap and it is that gap that the study attempts to explain.
Having no firm theoretical foundation, the study adopted an inductive approach using
mainly qualitative techniques but also adopted quantitative techniques given the nature
of the relationship among the variables.
Theoretical sampling was used initially to identify the study population. The study
identified large scale portfolio entrepreneurs as a unit of analysis and Uganda being a
small country, it was possible to assume some kind of laboratory conditions in which
the study was undertaken. The study‚Äôs overall aim was to establish whether a
relationship existed between entrepreneurship and economic growth. To achieve this,
the study examined the patterns of growth in the Uganda economy between 1962-2005,
the opportunities, the macro economic policy in place, the opportunities that emerged
and the role of the entrepreneur in those conditions. The study also examined the
emergence of new industries in the economy, the start-ups and exits of firms in the
respective industries and the role of the entrepreneur and how this related to economic
growth. To secure the data, the study used a case study design for portfolio
entrepreneurs combined with a survey for small and medium and corporate
entrepreneurs. Unstructured interviews were conducted with portfolio entrepreneurs
and self administered questionnaires were used for the other respondents. Secondary
data were collected from numerous published sources.
The study confirmed that there existed a relationship between macro economic policy
and economic growth which confirmed assertions by mainstream economists. The
study also established that a relationship existed between entrepreneurship and
economic growth. The Uganda economy as a small economy gives that ability to see
the relationship. The study reveals, using the Uganda economy, that large scale
portfolio entrepreneurs have an important role to play in orchestrating economic growth
through their activities of start-up, job creation and infrastructural development.
The study further confirms that liberalization of an economy as in the case of Uganda
creates opportunities and that these opportunities are seized by entrepreneurs. Portfolio
entrepreneurs play a key role in this process. Technology too has an important role
among other factors. As an industry is formed, many new firms enter it. This creates
competition. Competition may lead to development of new technologies, products,
services and processes. This leads to firm exiting the industry. The start-up and exit of
firms in an industry leads to job creation and loss. It is this process that Schumpeter
called the creative destruction where job creation and job losses that creates growth.
This study brings out the importance of the large scale portfolio entrepreneurs, how
they start business, perceive opportunities, and compete. The conclusions from the
study are that a relationship exists between entrepreneurial activity and economic
growth, and that large scale entrepreneurs have a major role to play in an economy.
They are job creators, tax payers, wealth creators, and through the multiplier effect.
There is need for deductive studies in an attempt to confirm this relationship.