Unlocking Startup Ecosystems: Conceptual Basis for Escaping Low-and-Lower-Middle-Income Trap through Poverty Reduction

The Low-and-Lower-Middle-Income Trap (LLMIT) poses a significant challenge for economies in low-and-lower-middle-income countries (LLMICs), hindering their progress towards higher income levels. This issue is especially prevalent in Southeast Asia, South Asia, and Sub-Saharan Africa, where job opportunities are scarce, and incomes are unstable. To address these challenges and promote economic development, particularly in terms of innovation and poverty reduction, it is essential to accelerate business activities, with a focus on fostering startup ecosystems. Despite the importance of this relationship, there is a noticeable gap in research, especially regarding the connection between startup ecosystems and economic development aimed at poverty reduction in LLMICs striving to overcome the LLMIT. This study conducts a qualitative empirical review to identify crucial conditions for promoting startup ecosystems as contributors to economic development. Preliminary demonstrations of theoretical foundations for escaping LLMIT through nurturing startup ecosystems are presented, referencing 15 selected literatures. Using the Grounded Theory Approach with ATLAS.ti, the findings highlight the scarcity of research on the mechanisms linking startup ecosystems to economic progress, notably in the context of poverty reduction in LLMICs facing LLMIT. The study emphasizes the necessity for continuous support in reviewing economic development policies and regularly monitoring economic performance, particularly in the aim of extensively mitigating LLMIT.