Applying Modern Stage Theory to Mauritania: A Prescription to Encourage Entrepreneurship

Abstract : Dr. Robert E. Looney is an accomplished economist who to date has written over twenty books and advised the governments of Iran, Jamaica, Mexico, Panama, and Saudi Arabia. In 2014, he compiled and released The Handbook of Emerging Economies, which includes perspectives from acclaimed economists and includes a chapter in which Dr. Looney relates modern stage theory to emerging economies. With an understanding that entrepreneurship is key for sustained economic growth, Looney studies an array of economic indexes, analyzing the data by stages of development, and mathematically determines which factors drive transition from one stage of development to the next. This thesis uses Mauritania, a West African commodity-driven country, as an opportunity to apply Dr. Looney s recent work to a new case. It describes the Mauritanian context, explains modern stage theory, recounts Looney s findings, uses Looney s methods to collect data on Stage 1: Factor-Driven economies, applies Looney s theory to Mauritania, and concludes with policy recommendations for both the U.S. and Mauritanian governments. This thesis concurs with Looney s findings that trade freedom and business freedom are the most significant factors influencing countries to proceed from Factor-Driven economies to a transition stage between Factor- Driven and Efficiency-Driven. The U.S. government can focus on opening trade between the U.S. and Mauritania by reducing tariffs, overly burdensome regulations, and subsidies that inflate the price of Mauritanian goods in the U.S. market. The Mauritanian government may focus on improving business freedom by streamlining the time, cost, and complexity to open a business, assisting financing, and providing mentorship to budding entrepreneurs.