Mobile telephony and new business formation rates in BRICS and beyond: Does human capital matter?

Abstract

This study examines whether and to what extent ‘domestic’ education level mediates the relationship between mobile phone diffusion and new business formation rates across the developing world i.e. Brazil, Russia, India, China and South Africa (BRICs) and Non-BRICs Developing Countries. Drawing on Knowledge Spillover Theory of entrepreneurship, the paper posits that due to the recent rise in education in the developing world, mobile phone diffusion will be positively associated with new business formation rates, and education level will facilitate (mediate) the relationship. Utilising country-level panel data on 66 developing countries, the results suggest that education level is a mediator between mobile phone diffusion and new business formation rates not just in Developing Countries (Including BRICs) but also in Non-BRICs Developing Countries with the exception of least developed countries (LDCs). Implications are drawn for theory and policy.