A shop in Hong Kong where people can receive money sent from abroad. Remittances accounted for more than 80 percent of foreign investment into mainland China from 1979 to 1995. (Photo: Wikimedia Commons)
“There is nothing more powerful than individuals motivated to invest in meaningful programs in their home countries,” said Eric-Vincent Guichard, the Founder and CEO of Homestrings, an online platform facilitating global diaspora investments. The son of a Guinean father and an American mother, Eric spent most of his formative years in Guinea attending primary and secondary school before moving to the United States. From his personal experience, he knows the challenges that diaspora communities face when trying to invest in their country of origin.
Remittances comprise a significant portion of the foreign directed investment (FDI) in many countries. According to the World Bank, global remittances consistently dwarf foreign assistance by a factor of three, with $414 billion projected this year alone. Even in countries that attract a lot of investment from global markets, the role of diaspora investment is substantial: between 1991 and 2001, the Indian diaspora was responsible for $2.8 billion of the $10 billion in foreign investment the flowed into the country. In China, diaspora investment accounted for the vast majority — 80 percent — of total FDI between 1979 and 1995.
Remittances have come to play this vital role as source of FDI despite various rules and regulations that make it difficult for individuals to invest in private companies back home. Traditionally, diaspora remittances have flowed mostly to family members, religious institutions, and non-governmental organizations.
These channels are invaluable when it comes to supporting charitable causes and small family businesses, but do not give investors much control over how the money is used or provide the opportunity to re-invest or make a profit. This significantly limits the potential of diaspora investment to develop larger, more productive businesses that can create jobs and economic growth back home.
Kiev is Ukraine’s political and economic capital. (Photo: Wikimedia Commons)
The Ukrainian government is in the difficult position of trying to overhaul a wide range of economic, judicial, and political institutions, all while fighting a war in the country’s east. The challenges are stark: Ukraine is in the midst of its worst recession since 2009, and the government expects the economy to shrink by 9.5 percent this year, with annual inflation likely to reach 48 percent. Thus it comes as no surprise that many Ukrainian citizens have begun to complain that the government isn’t doing enough, or that the pace of change after the EuroMaidan is too slow.
A policy paper released by the Friedrich Naumann Foundation in November 2014, not long after the current government took office, analyzed a range of Ukrainian policies that are slanted against the business community, creating particular challenges for small and medium-sized enterprises (SMEs).
While the reform effort since 2014 has been intense, many SME owners are still not satisfied with efforts to ease the regulatory burden, according to the findings of a national survey of over 1,600 SMEs, recently conducted by CIPE as part of the USAID project Supporting Urgent Reforms to Better Ukraine’s Business Environment (SURE) .
“When women come together in Nicaragua, we usually talk about families and communities. We never discuss about our businesses. That’s why a community like Red de Empresarias de Nicaragua (REN) is important, where women are encouraged to talk about their businesses without offending someone or thinking it’s a taboo.”
Marla Reyes Rojas, the owner of Techno Commerce Group, told me this over a cup of coffee during my recent trip to Managua. I was glad to hear first-hand how a CIPE partner is fostering a community where businesswomen, like Marla, can openly talk and build networks with other women in business.
Micro, Small, and Medium Enterprise (MSME) growth has been touted as a key for Nicaragua’s economic growth, but the country remains one of the most difficult places to start a business in Central America (for example, the licensing process takes more than 200 days to complete). This is even more pronounced for women entrepreneurs who confront myriad of challenges, and as a result only represent around 25 percent of the MSME sector in the country. Additionally, women face the rooted machismo culture that prevents them from achieving gender equality in the economy.
In such an environment, it’s crucial for women in business to come together and motivate one another. That’s why for the past year, REN led a mentorship program to develop leadership and entrepreneurship skills among women in Nicaragua. The program linked successful women entrepreneurs to female university students with business degrees (who served as interns) and emerging women micro-entrepreneurs (who were the mentees). REN matched ten teams — a team consisted of a mentee, mentor, and an intern — and each group worked to improve the mentee’s business.
Under the banner of “Identity, Community, Vision,” over 1,300 delegates from around the world gathered in Turin, Italy on June 10 to attend the World Chambers Congress. The main focus of the three day event was how to strengthen small and medium enterprises (SMEs) worldwide to create jobs. Organizers focused on the need to create enabling environments for these businesses to grow and prosper – especially when it comes to youth and entrepreneurs.
“Chambers of Commerce play an increasingly important role in the global economy and are central to the International Chamber’s vision to promote trade as a driver of growth, jobs and sustainable development,” International Chamber of Commerce (ICC) Chairman Terry McGraw told the delegates. “The World Chambers Congress is an essential forum to promote knowledge sharing between chambers from around the world – driving real development of public-private partnerships.”
More than a year after the EuroMaidan protests took the world by surprise, Ukraine’s political and economic struggles continue. Developments in the country since the new government came to power highlight the ongoing challenges of systemic overhaul following an exciting, rapid transition. These challenges clearly illustrate the link between democratic development and economic reform, so central to CIPE’s work. Accomplishing the tasks facing Ukraine, from combating corruption, to reducing the barriers to doing business, to creating space for public-private dialogue, will be no easy feat.
The success of Ukraine’s economic and democratic development largely depends on ensuring the success of the country’s small and medium-sized enterprises (SMEs). The entrepreneurial and flexible nature of SMEs makes them integral to achieving a number of the country’s goals: economic diversification; closer integration with Europe; building an adaptable economy; stimulating job growth; and boosting productivity.
Ukraine thus seeks to emulate the ways in which SMEs have helped make the U.S. economy among the world’s most successful. Boosting SMEs will require both giving the business community – and SMEs in particular – a seat at the policymaking table, and providing these firms with extensive support and training. CIPE’s partners are playing an important role in both of these processes.
CIPE’s primary focus in Ukraine has been to reduce policy barriers to business through cross-regional advocacy. Since opening the Kyiv office in 2010, CIPE has developed an extensive network of partner business associations and chambers of commerce across the country that work to represent and support Ukraine’s citizens through the work that they do.
The author, Kim Bettcher, with Jehan Ara, President of the Pakistan Software Houses Association (P@SHA) in Milan.
What I love best about the Global Entrepreneurship Congress, most recently the GEC 2015 in Milan, is the diversity of approaches, organizations, and countries that I encounter under the big tent. At this carnival of entrepreneurship, one meets founders and policymakers, leaders from innovation economies and emerging markets, people who have already made it and others who are shaping the future.
Out of this medley, I try to stitch together, what do we actually know about advancing entrepreneurship? And where might promising new directions lie? For me, the theme of this year’s congress was moving the frontiers of entrepreneurship. We are currently pushing against several big frontiers, which include geographic, demographic, and policy frontiers.
Emerging markets are the first frontier. While commonly described as factor-driven or efficiency-driven economies, emerging markets contain pockets of innovation and entrepreneurial ambition. For instance, entrepreneur stories from the Middle East captured in Christopher Schroeder’s Startup Rising have created considerable excitement, as has the Cinderella story of Medellín, Colombia, the site of GEC 2016. In Milan, I was honored to have on my panel Jehan Ara, President of the Pakistan Software Houses Association (P@SHA), who recently founded the Nest i/o incubator. Ara described a growing entrepreneurial community in Karachi and a feeling among entrepreneurs of “wanting to give back” (not unlike the community spirit described by Brad Feld in Boulder). I was ecstatic to see our friends from Nepal, the Samriddhi Foundation, take the limelight as winners of the Rookie of the Year award.
Korea’s rapid economic ascent over the past few decades was powered by huge conglomerates like Samsung. Now the country is aiming to encourage more startups and entrepreneurs.
By Tyler Makepeace
The Republic of Korea is one of the greatest economic development success stories in history — going from one of poorest countries in the world and a major aid recipient to a high-income country and a major aid donor in just a single generation. Both the head of the World Bank and the United Nations claim Korea as their birthplace.
The “Miracle on the Han River” which led to Korea’s stunning economic growth was based on an export-oriented industrialization model, similar to that of Japan, Taiwan, and later China. However, this model of fast growth has now run its course, and for Korea to continue onto the next stage of economic development it will require a different model for economic growth based on an innovative society.
In response to this need, President Park Geun-hye announced in her 2013 inaugural speech the beginning of the “Second Miracle on the Han River” through a new policy called the Creative Economy. This initiative seeks to create a supportive ecosystem for entrepreneurs and SMEs, especially in the tech sector, in order to boost job creation and pursue greater economic democratization within the country.