The wealth gap relative to higher-income economies is primarily driven by a persistent productivity shortfall. On a broader scale, leading firms — particularly in the tech sector — trail global counterparts in productivity and innovation. This partly reflects lower investment in Research and Development (R&D), rooted in less reliance on equity financing.
The Shortage of "Gazelle" Firms and Barriers to Growth These factors are compounded by a wider lack of corporate dynamism. Firms tend to enter the market small and rarely manage to scale up. Consequently, the economic footprint of young, high-growth firms is significantly smaller than that seen in other benchmark markets.
This rarer occurrence of high-potential firms (commonly known as "gazelles") is shaped by multiple structural factors:
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Limited access to venture capital;
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Human capital mismatches relative to market demands;
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Tax obstacles and regulatory barriers that penalise corporate growth.
Taken together, this comparative lack of dynamism, affecting both leading firms and young high-growth prospects alike, explains the disproportionately large share of small businesses in the corporate fabric.
Policy Remedies and Future Pathways To reverse this trend and stimulate economic growth, potential public policy remedies include:
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Regulatory streamlining: Simplifying product market regulations and cutting through bureaucratic red tape.
Strategic financing: Improving young firms’ access to long-term risk capital through international-level initiatives and funding.
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