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Development of Entrepreneurial Firms in Emerging Economies for Economic Diversification: an Insight from Nigeria

Author

Listed:
  • Patrick Onochie Okonta

    (University of Nigeria)

  • Ikechukwu Andrew Mobosi

    (University of Nigeria Nsukka)

  • Victor Chukwunweike Nwokocha

    (University of Nigeria Nsukka)

Abstract

Economic diversification reduces economic vulnerability to external shocks by transforming the economy from a single income source to multiple sources of income. This can be spread over to various sectors, involving large sections of the population to improve economic performance for sustainable growth. However, given that Nigeria runs a mono-economy, complete diversification of the economic activity base has remained a key challenge for the country. The paper seeks to analyse the development of entrepreneurial firms in emerging economies for economic diversification in Nigeria. This paper used secondary data and applied a quantitative approach in the data analysis. Data were obtained from Nigeria Central Bank Statistical Bulletin (1989–2019). Nigeria’s economic diversification index was derived as the inverse of the Herfindahl-Hirschmann concentration index (HHI). Regression analysis was used to analyze the relationship between index of economic diversification, the initial diversification index (DIV_INDEX), entrepreneurial firms’ business investment value (EFBV) and credit to entrepreneurial firms (CEFs). It was also used to analyse the credit to the private sector (CRP), domestic savings (DSAV), and inflation rate (INF). The result showed that Nigeria is still at a low concentration index of 3.8 and 3.9, respectively, in terms of economic diversification. The paper recommended that given the potential of entrepreneurial firms in creating multiple sources of income for Nigeria’s economy, development planners and policy-makers are expected to create adequate policy frameworks to galvanise the activities of entrepreneurial firms in Nigeria.

Suggested Citation

  • Patrick Onochie Okonta & Ikechukwu Andrew Mobosi & Victor Chukwunweike Nwokocha, 2024. "Development of Entrepreneurial Firms in Emerging Economies for Economic Diversification: an Insight from Nigeria," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 20778-20796, December.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:4:d:10.1007_s13132-023-01611-3
    DOI: 10.1007/s13132-023-01611-3
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