Category Archives: Global

Democracy and Entrepreneurship in India

Posted on 1 April, 2013 by | 1 Comment
Pedestrians cross the Horwah Bridge in West Bengal. (Photo: Wikimedia commons)

Pedestrians cross the Horwah Bridge in West Bengal. (Photo: Wikimedia commons)

Does entrepreneurship and democracy go hand and hand in India? While India is touted as one of the world’s fastest-growing economies with “billions of entrepreneurs,” according to one author the ideals of entrepreneurship itself goes against the wheels of the country’s subjective democracy “where the caste system still rules the roost” of society.

In this week’s Economic Reform Feature Service Article, Chandrima Padmanabhan, the grand prize winner of CIPE’s 2012 International Youth Essay Competition, talks about the relationship between democracy and entrepreneurship  in India in her provocatively titled essay “Entrepreneurship in India: The Evolution of the Pedestrian Pariah.”

Chandrima explains that the title of the essay is meant to reflect democratic and economic struggles that ordinary citizens, including aspiring entrepreneurs, face:

By pedestrian, I’m referring to every ‘undistinguished, ordinary’ person who walks our streets. And by pariah I meant ‘outcast’. About 60 per cent of India’s population is not so well to do. They walk the streets when they can, instead of using automobiles and they live in small houses, not high-rise apartments. But the India of today doesn’t cater to the masses. It caters to the rich and affluent.

By pedestrian pariah I highlight the common people of India who make the majority of the population but are still outcasts in every decision making/policy influencing scheme.

Read the entire article here.

As a grand prize winner, Chandrima Padmanabhan will be attending CIPE’s upcoming Democracy that Delivers for Entrepreneurs conference April 9-10 in Chicago.

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The State of Global Democracy in 2012

Posted on 28 March, 2013 by | Leave a comment

democracy-at-a-standstill

The Economist Intelligence Unit’s 2012 Democracy Index (registration required) paints a grim picture of “democracy at a standstill.” While there are some silver linings — almost half of the world’s population lives in “a democracy of some sort,” a historic achievement — the report highlights how fragile democratic transitions can be.

The report notes that the Arab Spring revolutions of 2011 have largely stalled as new regimes in Egypt, Tunisia, and Libya struggle to achieve their democratic aspirations and other countries around the region proceed cautiously with their own reforms. Though the MENA region as a whole increased its average democracy score by more than a point, from 3.62 to 3.73, it has a long way to go: “full democracy” requires a score of 8 or greater (scores below 4 are considered “authoritarian regimes.”)

At the same time, much of Eastern Europe, which began its transition more than 20 years ago, saw an erosion of democracy in 2012. Authoritarian regimes in many CIS countries became increasingly entrenched while political cultures in the democracies of east-central Europe weakened. Countries in Latin America were plagued by organized crime, attacks on media freedom, and populist movements with authoritarian tendencies. Even long-established Western democracies reported declines in political participation and the functioning of government, the report said.

One bright spot was Sub-Saharan Africa, which continues its slow and steady democratic progress, though the island of Mauritius remains the only African state rated as a “full democracy.”

More than anything, though, this index shows that the work of democratic transition is far from over. As the report notes, “It is not easy to build a sturdy democracy. Even in long-established ones, democracy can corrode if not nurtured and protected.”

This is why CIPE has worked, and will continue to work, in each of these regions to help their citizens build democracies that deliver for the long term.

Jon Custer is Social Media/Communications Coordinator at CIPE.

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Why Do Entrepreneurs Operate in the Shadow Economy?

Posted on 25 March, 2013 by | Leave a comment

What is the “rule of law” and why does it matter for entrepreneurs? In this video, Democracy that Delivers for Entrepreneurs keynote speaker Hernando de Soto explains how the legal and institutional structures that entrepreneurs and business people in the developed world take for granted are sorely lacking in many developing countries. As a result, those who want to start a business are often forced to operate in the shadows — lacking formal registrations, licenses, and any protection for their property.

De Soto’s organization, the Institute for Liberty and Democracy (ILD), estimated that up to five billion people may be completely shut out of the legal system. The results can be catastrophic and even world-changing.

When Tunisian fruit peddler Mohamed Bouazazi had his cart, scale, and inventory confiscated by a police inspector in 2011, he was so despondent that he set himself on fire — igniting the Arab Spring that brought down several governments around the region.

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Posted in Global, Middle East and North Africa

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Untapped Potential – Don’t Overlook It!

Posted on 19 March, 2013 by | Comments Off
It can be hard for policy makers to guess which company will stand out from the herd. (Photo: Wikimedia commons)

It can be hard for policy makers to guess which company will stand out from the herd. (Photo: Wikimedia commons)

As the world catches on to entrepreneurship’s power to spark growth and employment, high-growth firms have grabbed our attention. Less than one percent of firms – the “gazelles” – propel job growth at more than 10% percent per year (OECD, Entrepreneurship at a Glance 2012). Many policymakers and NGOs rightly seek to encourage high-growth entrepreneurship.

Stop and think, though, before chasing the excitement of glamorous entrepreneurs. You could be missing out on genuine untapped potential in the process.

  • Don’t pick winners – It is exceedingly difficult to predict which firms will succeed in new markets. The best entrepreneurs may not match the profile of past successes; rather, they tend to be the ones who go against the grain.
  • Don’t subsidize the elite – There’s absolutely nothing wrong with talented, educated individuals from well-off families starting innovative firms that create jobs. However, helping entrepreneurs who already have what it takes wastes resources and risks reinforcing barriers that confine opportunity to the elite.
  • Don’t forget mid-size firms – Common perceptions and programs for business focus either on large corporations or micro businesses. Mid-size firms are potential leaders, more serious than many startups, and underserved.
  • Don’t forget the informal sector – While the sector is often characterized in terms of underemployment, Hernando de Soto has shown us the vitality of entrepreneurship in the sector. Sure, not all informal businesses have growth aspirations or productive potential, but just like gazelles, a fraction of them can take off if they break into the formal economy.
  • Don’t forget women – The rise of women’s entrepreneurship represents one of the biggest phenomena in development. Women face distinctive barriers that hinder their enormous talent.
  • Don’t neglect the provinces – Investment and services gravitate to large capital cities. Meanwhile, provincial areas are cut off from global markets and even domestic markets. This is the frontier of emerging economies.
  • Don’t limit attention to high-technology firms – Technology generates the greatest productivity gains outside of the technology sector itself. Entrepreneurship is about new business models and commercializing innovation, not new inventions.
  • Don’t miss the entrepreneurial environment – No question, the regulatory environment affects decisions to start a business. In environments hostile to business, entrepreneurs have no incentive to invest and take risk. Institutions hold the key to long-run economic performance.

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How Do Institutions Facilitate Entrepreneurship?

Posted on 19 March, 2013 by | Comments Off

The great Peruvian democracy advocate Hernando de Soto has spent much of his career focused on bringing informal entrepreneurs into the formal sector, where their rights are enshrined in and protected by law. When citizens have the tools to access to capital and a business environment that supports them, they are able to move up the development ladder from the survival entrepreneurship of the informal sector to the prosperity of the formal economy.

De Soto’s work encouraged an important new way of thinking about how to create opportunity where none previously existed. In so doing, he and his organization, the Institute for Liberty and Democracy (ILD) in Peru, have had a profound and positive impact on the lives of millions in Peru and around the world. CIPE’s first partner 25 years ago, De Soto’s and ILD’s work personifies the proven belief that strong markets require vigorous governance and vice versa, and that open participation in both markets and government are a foundation of democracy.

In this most recent Economic Reform Feature Service article, De Soto looks at the necessity of institutions—and specifically the rule of law—to create and nurture a successful entrepreneurial environment.

Article at a glance

  • Creating wealth through entrepreneurship requires combining different resources (for example, the parts of a pencil or those of a watch). Institutions are crucial to facilitating that combination.
  • To do all the things that entrepreneurs in developed countries take for granted – like dividing labor, using property as collateral, protecting personal assets, expanding markets, or creating economies of scale – entrepreneurs in developing nations need the standards that only legal institutions can provide.
  • The wealthy in developing nations have convinced the poor that no matter how talented or enterprising they are, they will never succeed. In fact, the world’s most successful entrepreneurs just have access to superior legal institutions.

Read the entire article.

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Posted in Global, Latin America and the Caribbean

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International Women’s Day 2013 Wrap-Up

Posted on 14 March, 2013 by | Comments Off

Thanks to all of our partners and blog contributors for helping CIPE celebrate International Women’s Day, 2013. Over the past week we have written about:

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International Women’s Day Q&A with CIPE Board Chair Karen Kerrigan

Posted on 8 March, 2013 by | Comments Off

CIPE board chair and Small Business & Entrepreneurship Council President and CEO Karen Kerrigan is actively involved in many efforts to empower women, particularly through entrepreneurship. As we celebrate International Women’s Day, here are some of her insights on increasing women’s political and economic participation around the world.

CIPE: Some of the key aspects of women’s empowerment – political, economic and civic – are not fully understood around the world, especially when it comes to the inherent linkages between all three. How do you view them? Why do you think they are important and interconnected?

Karen Kerrigan: The voice and full participation of women in all realms – political, economic and civic – is essential to building and sustaining an inclusive, innovative, and opportunity-driven environment for countries and societies.  Government policies and inequitable laws, for example, may erect roadblocks for women who want to start businesses or pursue certain careers. Similarly, economic opportunities and growth are limited for all citizens when a nation fails to harness the energy and value of half of its human capital assets.

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