Author Archives: Frank Stroker

Rebalancing China’s Economy: More than Just Numbers

Customers at a supermarket in China. (Photo: BusinessForum China)

Over the past thirty years, China’s GDP has soared from $140 billion to nearly $6 trillion. This phenomenal growth has been sustained at double-digit rates largely through a reliance on exports from heavy industry.  Recently however, slow growth in the US and a renewed crisis in Euro zone countries have shown China that it cannot count on exports forever.  The new leadership, headed by Xi Jinping, must now oversee a transition to an economy that relies on domestic consumption over export based industrial production.

With the world’s largest population one would think domestic consumption should not be difficult to achieve.  Wang Shiling, who runs a mall in Linyi, perhaps put it best when he said, “people still need to consume living necessities. Toothpaste, notebooks, basins, you name it. Don’t forget that China has 1.3 billion people!” Even with such a large population though, domestic consumption only constitutes about 37% of China’s economy (the rate in developed countries is closer to 70%).

Economic indicators also suggest that China is on the path to rebalancing the economy.  Since 2009, wages have been on the rise while government stimulus packages have focused on infrastructure and construction, which not only employ workers but aid the movement of goods and services throughout the country.

For all this though, China still faces many barriers to growing domestic consumption.  The average Chinese may be earning more than before and stringent restrictions on the financial sector have recently been (ever so slightly) relaxed, but rebalancing the economy is about more than salaries and interest rates.  In order to spur wider consumption, the government must reform current policies to encourage citizens to spend more and  local businesses to expand productivity.

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Driving Youth Entrepreneurship in Pakistan

Last week the Islamabad Chamber of Commerce and Industry ICCI joined the Center for International Private Enterprise and  Kauffman Foundation to celebrate Global Entrepreneurship Week.  Aiming to determine obstacles to entrepreneurship, ICCI gathered a large number of young entrepreneurs, established businessmen, and students to discuss key impediments to aspiring entrepreneurs.

Amid their discussion, many participants voiced the opinion that the main objective should be to foster an entrepreneurial culture among youth.  CIPE Deputy Country Director Hammad Siddiqui asserts that the only way Pakistan can take advantage of its bulging youth population and push through the hard times of a sluggish economy and few jobs is to provide an environment that encourages youth towards entrepreneurial careers.  Some attendees expressed the need for the curriculum in schools to stoke interest in students.  While this is absolutely a vital part of building an entrepreneurial ecosystem, it is also important to advocate on the policy side as well.

Earlier this year, ICCI won second place in CIPE’s 2012 Leading Practices contest for its efforts to not only increase interest in entrepreneurship, but to advocate for a supportive policy environment.  Being the first chamber in Pakistan to focus on youth development, ICCI created the Youth Entrepreneurship Forum and organized numerous conferences, forums, and seminars inviting youth and university students to attend.  ICCI went a step farther to include policymakers, academics, and young professionals in the events in order to identify existing barriers and craft plausible solutions.  Many of the recommendations that emerged from such events have been adopted by the government and incorporated into the National Youth Policy.

Currently, the Young Entrepreneurs Forum continues to grow and has established connections with universities and other chambers throughout the country.  ICCI also sends youth delegations on international trips to meet with similar youth groups around the world and participate in international forums such as World Chambers Congress.  With the support of CIPE, ICCI has established an Entrepreneurship Development Center that provides aspiring entrepreneurs with access to requisite tools and mentorship.

Through such efforts, ICCI has sparked an amazing interest in entrepreneurship and provides support for those who aspire to start their own enterprises.  Numerous competitions in Pakistan now reward startup teams by matching them with experienced mentors or even helping to secure capital from investors.  But more importantly, ICCI recognizes the importance of also providing a supportive policy environment, a crucial part of any entrepreneurial ecosystem, in which youth have access to the economy.  Regardless of the amount of interest or access to tools and financing youth have, if the environment lacks sound policies, youth will remain excluded and unable to participate in the economy.

The Role of Entrepreneurs: A Global Entrepreneurship Twitter Chat

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.

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We Want to Hear From You

Reflecting over the past year, CIPE has developed a number of resources.  From twice-monthly FeatureService articles written by thought leaders and experts to more targeted publications including the new guidebook on addressing the implementation gap in local governance.  In addition to printed materials, CIPE hosts this blog, sends multiple electronic updates, and even launched a new website.

Now it’s time for you to give us your feedback!  We would like to know about how you interact with CIPE and make use of its resources. By completing our brief survey, you can help us serve your needs as we provide information about democratic and market reform around the world.

Those who complete this survey are eligible to win an Amazon Kindle! To be eligible, you must provide your contact information at the end of the survey.

Take the survey by Monday, November 19th at http://www.surveymonkey.com/s/2HSTPJX

Thank you in advance for your time and we look forward to reviewing your responses.

Translating Success: CIPE Announces 2012 Leading Practices Contest Winners

 

It is becoming more and more accepted that there is no universal solution to overcoming the challenges of development.  That is not to say, however, that cross-regional learning is not a viable avenue to success.

Drawing on almost 30 years of experience in democratic and market reform, CIPE gathers and shares leading practices throughout its partner network in order to provide effective program ideas and increase success in reform.  To facilitate this process, last year CIPE launched a Leading Practices Competition to draw attention to innovative projects throughout the CIPE network.  This year marks the second annual competition. And the winners are:

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ICC Announces 2013 World Chambers Competition

In conjunction with the 8th World Chambers Congress taking place in Doha, Qatar April 22-25 2013, the International Chamber of Commerce has launched its newest addition of the World Chambers Competition.  This competition is the only global awards program to recognize innovative projects undertaken by chambers from all over the world.  Including organizations from both the developed world and emerging countries, the 2013 World Chambers Competition provides a unique opportunity for chambers to showcase originality and ingenuity.

In this year’s competition, judges are looking for the best projects in the categories of corporate social responsibility, international trade, small business, youth entrepreneurship, and Best Unconventional project.  From service provision for specific groups to projects  that do not typically fall within chamber activities, the World Chambers Competition is looking for the most innovative and inspiring programs.  To qualify, any project submitted must have been in operation within a 24 month period preceding January 2013 and applications must be submitted by November 30, 2012.  Finalists will be chosen and notified by February 2013 and will be judged before a jury at the World Chambers Conference in April.  For more information and to apply, visit the ICC website.

 

Free Enterprise & Democracy: Engaging the Private Sector on Global Democratic Discourse

FEDN members share ideas with MENA reformers at a meeting in Jordan. (Photo: Staff)

Every year, September 15 marks the passing of the International Day of Democracy. This year, organizations celebrating the Day of Democracy are encouraged to address issues of civic education by teaching citizens about democratic institutions such as constitutional rights, political representation, and how to participate past election day. UN Secretary-General Ban Ki-moon has stated, “In marking this year’s International Day of Democracy, let us… work to bring democracy education to all, and in particular, to those societies in transition that need it most.”

Civic understanding and involvement is no doubt critical to establishing and consolidating democracy. However, democracy education should not be limited to voters, especially when addressing countries in transition. Leaders and policy makers responsible for drafting and instituting democratic reforms also require an understanding of the forces that contribute to a functioning, sustainable democracy. As we have seen recently in many countries transitioning to democracy, a key question facing newly elected leaders is how to provide for the economic well being of citizens and the development of a country. If new governments fail in this, the consolidation of democracy cannot be assured.

Though this is a pressing issue, the sector most responsible for long-term economic prosperity has been largely absent from global fora on democracy. The absence of the private sector from these debates has resulted in a limited understanding among democratic reformers of the important links between the free market and democracy. Seeking to contribute to this understanding, the newly created Free Enterprise and Democracy Network (FEDN) brings together democratic reformers, champions of the private sector, and members of civil society to advocate for a positive business environment and strengthen democracy.

FEDN believes that in addition to political and labor representatives, the private sector acts as a third pillar of democracy. Chief among the network principles is the belief that a free market economy and democracy are mutually supportive systems. Rule of law, for example, protects the fundamental rights of all citizens while also guaranteeing contracts and commercial commitments that are vital for the operation of business. Similarly, property rights create a framework for prosperity by providing a mechanism to access capital, but they also bolster civil rights and place constraints on government action. Essentially, FEDN members understand that the components of a free market also help generate the necessary institutions to sustain effective democratic governance.

Benefits flow in the other direction as well. As the FEDN principles state, “Democracy brings long-run benefits to sustainable growth and human development.” In addition to possessing intrinsic value, democracy is also a means to a better business environment as it provides checks on the abuse of authority and creates channels to improve economic policy. When the private sector is able to participate in policy discourse, independent voices contribute to effective policymaking, the result of which is sustainable economic growth.

In addition to expressing the linkages between democracy and the free market, FEDN aims to act as a forum for the exchange of ideas and mutual support among members. Earlier this year, Dr. Boris Begovic, president of the Center for Liberal Democratic Studies and FEDN steering committee member, traveled to Jordan to share the Serbian transition experience with a group of reformers from the Middle East and North Africa. Dr. Begovic’s remarks were complimented by a discussion with Dr. Jesus P. Estanislao, chairman of the Philippines’ Institute for Corporate Directors. Gaining invaluable insight, attendees from Yemen and Syria immediately drafted visions for reform and established organizations to gather input from the private sector and present recommendations to their respective governments.

The Syrian Economic Forum and Yemeni Economic Vision Task Force are two examples of the benefits mutual support through FEDN can provide. With the objectives and principles formally released, CIPE and the steering committee are now working to engage business leaders, activists, representatives of civil society, and reformers to share experiences and ideas. While attending the World Movement for Democracy next month, steering committee members will begin outreach in earnest.