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entrepreneurship and economic development

Page history last edited by Brian D Butler 10 years, 1 month ago

related pages from GloboTrendsSilicon Valley , Silicon Valley of Europe , economic development and geography , Economic Development  , Entrepreneurship in Brazil , environment and economic development , entrepreneur: global entrepreneurship



Table of Contents:





Entrepreneurship as the key to development


We at Kookyplan strongly believe that the key to economic development is entrepreneurship.  But in order to have a strong entrepreneurial base, there are some cultural elements that need to be discussed. 


#1.  Fear of failure.  In countries where failure is accepted ("try again attitudes"), there is more likelyhood that someone will risk failure and start up a company.  Many cultures, especially in Latin America, see failure in business as extremely shameful, and to be avoided at all costs.  In many of these cultures, you only get on chance, and the idea of a "serial entrepreneur" is a bit foreign. see our discussion on culture and entrepreneurship


#2.  "Why not me?" attitude:  in cultures like the USA, people think that everyone is equal, and that anyone can achieve great success.  This is based on a very egualtarian view of all mankind, mixed with extreme optimism that anyone can achieve anything.  This optimism is reinforced by stories of everyday people turning into millionares.  The legend of the garage, turned multinational corporation fuels this optimism that anyone can achieve greatness.  Also, the ideal that "all men are created equal", and that rich people are not better, or smarter than you or I is a great motivator for someone to take a chance.   In other cultures, however, where there is a more "heirarchial" view of the society, it is common for people to think that richer and more powerful people see opportunities.  So, if they are not doing it, then the opportunity must not exist.


#3.  Venture capital readily available.  This is key, because great ideas need funding if they are going to turn into great businesses.  If ample funding is available to fund 9 failures, in hopes of finding that 10th one that will succeed...then there is a chance. 








1. from MSU (Michigan State University)


International Entrepreneurship
The module on international entrepreneurship is helpful for understanding the forces that make it possible for entrepreneurs to rapidly internationalize. This module will discuss the drivers of international new venture creation, the technology associated with new venture creation, as well as the barriers and incentives.





1. from MSU (Michigan State University):




Feature of the Month : Entrepreneurship in Developing Countries


In recent years, business leaders and governments have recognized the importance of stimulating economic growth through the promotion of entrepreneurship. Alongside economic growth, entrepreneurship fosters the innovation of new business ideas and allows the creation of much needed jobs for the world’s economy. In a globalized and interconnected world, one might assume that entrepreneurship is a common business approach and is similar across the world regardless of what country you are in. However, that is certainly not the case as entrepreneurship in developing countries is very distinct from entrepreneurial practices in more developed countries. Having a better understanding of entrepreneurship in developing countries is important for economic growth and development, making the world a better place for international business.


Featured Resources


Global Entrepreneurship Monitor: National Reports
Global Entrepreneurship Monitor (GEM) is a not-for-profit research program that focuses on providing data on entrepreneurial activity for over 70 countries. The site includes research and publications on a number of different topics, and through its National Reports, GEM gives country-specific entrepreneurial information on an annual basis.


United Nations Industrial Development Organization (UNIDO)
The United Nations Industrial Development Organization (UNIDO) helps developing countries and countries with economies in transition in their fight against marginalization in today's globalized world. It mobilizes knowledge, skills, information and technology to promote productive employment, a competitive economy and a sound environment. Statistics, publications, weekly news, a calendar of events, and more are provided by UNIDO.



2. from CFR.com 



Supporting Entrepreneurship in Postconflict Contexts

In this new Working Paper, CFR's Gayle Tzemach Lemmon asserts that promoting economic development by investing in entrepreneurs is essential for stability and security in conflict and postconflict zones. For a class on international development, economics, business, postconflict/conflict studies, or related topics, assign this report and have students write a policy memo that supports one of the recommendations. Access the Working Paper »









But, is VC money necessary for innovation?


According to a new paper


"What they found was surprising. VC investment lagged behind "total factor productivity" (TFP) growth by two years. And follow-on rounds of investment caused a decline in TFP in the first year. In other words, venture capital slowed down the innovation process. Additionally, they found that delayed TFP growth is correlated with first round VC investment. That essentially means that the money goes where the innovation is, not the other way around."




Policy makers typically interpret positive relations between venture capital investments and innovations as an evidence that venture capital investments stimulate innovation ("VC-first hypothesis"). This interpretation is, however, one-sided because there may be a reverse causality that innovations induce venture capital investments ("innovation-first hypothesis"): an arrival of new technology increases demands for venture capital by driving new firm startups. We analyze this causality issue of venture capital investments and innovation in the US manufacturing industry using both total factor productivity (TFP) growth and patent counts as measures of innovation. Using a panel AR regression as well as industry-by-industry AR regressions, we find that TFP growth is often positively and significantly related with future VC investment, which is consistent with the innovation-first hypothesis. We find little evidence that supports the VC-first hypothesis. More surprisingly, one-year lagged VC investments are often negatively and significantly related with both TFP growth and patent counts.


read more: http://www.businessweek.com/smallbiz/content/sep2008/sb20080930_920684.htm


Key to Development:


suggestion for using entrepreneurship for economic development:  try to nurture a culture of people that are not afraid to take risks, eliminate the social punishment for failure, and actively promote risk capital industry to take chance on "kooky"  ideas.




Innovation and economic development:


Innovation is essential for sustainable growth: The impact of innovation is shown to be particularly positive on growth for medium-income countries. CEE governments should therefore not be tempted by the argument that, as catch-up countries, they only need to imitate and assimilate foreign ideas in order to sustain economic growth.


MNC innovation brings few benefits to domestic enterprises: Despite massive foreign direct investment into the region, and the introduction of modern production and management methods, there have not been sufficient “spillovers” of technology and “know-how” into the domestic economy.


How to boost inputs and improve the innovation environment: Improving innovation performance requires an increase in direct inputs—such as R&D spending, better science education and IT infrastructure—as well as improvement to the overall innovation environment such as less bureaucracy, fairer taxation and more flexible labour markets. 


Talent-related issues are a major concern: Three of the four business operational issues regarded as very important by a majority of our survey respondents were talent-related: availability of university graduates; availability of scientists and engineers; and technical skills of the workforce. Finding the right staff can be made harder by the persistence of a “brain drain” from the region.


Innovative firms have mixed views about the ability of government to help:  Typical complaints include lack of effective tax legislation, particularly regarding tax advantages for start-up businesses and employee share ownership, and weak links with universities.


source:  economist







MIT course: G-Lab: Global Entrepreneurship Lab


Recommended Readings:


  • McMillan, John, and Christopher Woodruff. "The Central Role of Entrepreneurs in Transition Economies." Journal of Economic Perspectives 16, no. 3 (2002): 153-170.  link here
  • French, Howard W., and Lydia Polgreen. "Entrepreneurs from China Flourish in Africa." The New York Times, August 18, 2007, Late Edition, sec. A1.
  • Baumol, William. "Entrepreneurship: Productive, Unproductive, and Destructive." Journal of Political Economy 98, no. 5 (1990): 893-921.



Rules for Growth

Rules for Growth: Promoting Innovation and Growth Through Legal Reform (PDF)  



A collection of essays promoting innovation and growth through legal reform

The United States economy is struggling to recover from its worst economic downturn since the Great Depression. After several huge doses of conventional macroeconomic stimulus—deficit-spending and monetary stimulus—policymakers are understandably eager to find innovative no-cost ways of sustaining growth both in the short and long runs.


In response to this challenge, the Kauffman Foundation convened a number of America’s leading legal scholars and social scientists during the summer of 2010 to present and discuss their ideas for changing legal rules and policies to promote innovation and accelerate U.S. economic growth. This meeting led to the publication of Rules for Growth: Promoting Innovation and Growth Through Legal Reform, a comprehensive and groundbreaking volume of essays prescribing a new set of growth-promoting policies for policymakers, legal scholars, economists, and business men and women. Some of the top Rules include:


  • Reforming U.S. immigration laws so that more high-skilled immigrants can launch businesses in the United States.   
  • Improving university technology licensing practices so university-generated innovation is more quickly and efficiently commercialized.
  • Moving away from taxes on income that penalize risk-taking, innovation, and employment while shifting toward a more consumption-based tax system that encourages saving that funds investment. In addition, the research tax credit should be redesigned and made permanent.
  • Overhauling local zoning rules to facilitate the formation of innovative companies.
  • Urging judges to take a more expansive view of flexible business contracts that are increasingly used by innovative firms.
  • Urging antitrust enforcers and courts to define markets more in global terms to reflect contemporary realities, resist antitrust enforcement from countries with less sound antitrust regimes, and prohibit industry trade protection and subsidies.
  • Reforming the intellectual property system to allow for a post-grant opposition process and address the large patent application backlog by allowing applicants to pay for more rapid patent reviews.
  • Authorizing corporate entities to form digitally and use software as a means for setting out agreements and bylaws governing corporate activities.


The collective essays in the book propose a new way of thinking about the legal system that should be of interest to policymakers and academic scholars alike. Moreover, the ideas presented here, if embodied in law, would augment a sustained increase in U.S. economic growth, improving living standards for U.S. residents and for many in the rest of the world.   Read more here:  Rules for Growth: Promoting Innovation and Growth Through Legal Reform (PDF)  





Business and development Sep 30th 2010, 16:40 by Schumpeter

"ANN BERNSTEIN'S new book, "The Case For Business in Developing Economies" (Penguin) is one of the best books on business and development in recent years. Ms Bernstein demonstrates, beyond doubt, that companies, rather than governments or aid agencies, hold the key to prosperity in the developing world; she also lays numerous body blows on anti-business NGOs, aid tsars, soft-headed academics and whingeing do-gooders (I should say that I was one of several people who blurbed the book)."  Read more from The Economist.com here








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related pages:  emerging markets Rise of purchasing power in emerging markets ,   Economic Development


















































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