Yesterday CIPE hosted a #GEWChat Twitter Chat with advocates around the world to discuss how entrepreneurship contributes to economic, social and democratic development. Entrepreneurs naturally help to grow the economy as their ventures provide new services and often lead to increases in employment. In fact, the basic characteristics of entrepreneurial ventures suggest that they are more effective for economic development than other strategies.
Startups are structured in a bottom-up fashion and tailored to the needs of local communities, which in turn leads to better engagement and sustainability. Furthermore, entrepreneurial ventures are not necessarily capital intensive, meaning they can be launched quicker than larger initiatives that may require drawn-out processes to secure necessary funding or even political support. Entrepreneurs are also more adept at navigating altering landscapes. Their smaller scale, limited structure, and independent thought processes allow for quick decision making while other strategies are slow to make necessary changes and adjustments.
Participants in the Twitter chat noted that there are a number of barriers to entrepreneurship in the developing world. Access to micro-finance and general liquidity are commonly cited as the biggest barriers, but capital is only one part of an extensive ecosystem that allows entrepreneurship to thrive. These ecosystems not only require finance, but also have elements dealing with policy, culture, support mechanisms, and markets.
The policy environment plays an important part in creating a supporting environment by mitigating risk and ensuring access to finance, but it is only part of the equation. In many instances, young people in developing countries don’t even think that starting their own business is an option. As one participant mentioned:
— mateen hamza (@humorcarbons) November 13, 2012
Rather than thinking creatively and striking out on their own, youth are driven to pick a job; this culture needs to change. Including entrepreneurship in school curricula is one way to address the problem but would-be entrepreneurs need mentors and local success stories as well.
In addition to endowing youth with a “concept of entrepreneurship” societies must do a better job of supporting those with entrepreneurial tendencies. Nascent entrepreneurs don’t just need financial support when it comes to starting a business. They also need personal support and for people to believe in their ideas. Rami Shamma, from Lebanon’s Development for People and Nature Association, noted
One of the main challenges that young entrepreneurs face is people not believing that they could do it, due to their age… #GEWChat
— Rami Shamma (@RamiShamma) November 13, 2012
Entrepreneurship is a powerful tool that can lead to sustained economic development that meets the needs of emerging countries. Such markets are characterized by rapidly changing environments to which other development strategies are often to slow or unable to respond. Entrepreneurs are typically plugged into their respective markets and are able to react quicker to changes and find innovative solutions to everyday problems. Only by creating the necessary ecosystems can developing countries tap into the economic power that entrepreneurs bring. This means not only creating the right policies, but the right culture as well.