This study aims to examine the empirical linkages between entrepreneurship, infrastructure development (ID) and economic welfare. This is relevant due to the paradox of rising entrepreneurial activity but deficiencies in ID, which is a strategic choice to accelerate entrepreneurial activity and boost economic growth and welfare in Africa.
The study utilizes the system generalized method of moments, feasible generalized least squares and method of moments, quantile regression estimation strategies with data from 52 African economies over the period 2002–2023. Particular attention is paid to electricity supply, information and communication technology, transport and water and sanitation as indicators of ID.
The result suggests necessity-driven entrepreneurship does not enhance economic welfare, but ID promotes economic welfare. The interactive effect of entrepreneurship and ID shows ID is relevant in the entrepreneurial ecosystem, without which necessity entrepreneurship will produce no positive impact on economic welfare. This positive effect is apparent at the composite infrastructure index threshold of 62%. Opportunity entrepreneurship, on the other hand, unconditionally promotes economic welfare.
Beside echoing the call for the strengthening of general entrepreneurial frameworks in Africa, where more opportunity entrepreneurs are created, there is a significant need for African governments to invest more in ID.
This study presents a unique case of the need for a deeper grasp of the dynamic interconnectedness of entrepreneurship with a key external factor, infrastructure, which is essential for its survival. It also shows the distinct impacts of necessity and opportunity entrepreneurship on economic welfare.
