Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries

The aim of this study is to provide a microeconomic investigation of the concept of entrepreneurship; in particular, the following issues will be discussed: (i) the alternative ways of looking at entrepreneurship, distinguishing “creative destruction” from simple “turbulence”; (ii) the different microeconomic determinants of new firm formation, distinguishing “progressive” from “regressive” drivers; (iii) the relationship between ex-ante characteristics (of the founder) and post-entry performance (of the new firm); and (iv) the possible scope for an economic policy aimed at maximizing the impact of entrepreneurship on economic growth. Where possible and appropriate, throughout the article, particular attention will be devoted to the specific features characterizing entrepreneurship in developing countries.

Go to Source

Tags: , ,

Exploring the idea of the Creative Class in an African city: A case study of ICT professionals in Nairobi

Written by Lauren Rosenberg (see below for her bio) Securing urban economic growth in new economy is less dependent on access to physical resources and increasingly dependent on attracting talent who…

[Visit www.afrinnovator.com for full links, other content, and more! ]


Go to Source

m4s0n501
Tags: ,

The best way to speed up economic growth: Turn on the lights

The Electrify Africa Act of 2013, awaiting committee approval in Congress, will help turn on the lights for millions of people in sub-Saharan Africa.

Following President Obama’s Power Africa initiative announced earlier this month, which invests $16 billion in public and private funding to combat energy poverty in Africa, Congress is reviewing a bill that would officially make electrifying Africa a governmental policy. Co-sponsored by a bipartisan contingent led by Representatives Edward Royce (R – CA) and Elliot Engel (D – NY), the bill aims to provide 20,000 megawatts of electricity to 50 million people in Africa by 2020, which is double the amount proposed by Power Africa. Considering the U.S. Embassy spends $10,000 a day on electricity in Liberia–a pricetag few small African businesses could afford–the bill comes at just the right time.

Some highlights of the proposed legislation:

  • Creates a comprehensive, multi-year strategy to assist sub-Saharan African countries to develop power solutions to alleviate energy poverty and drive economic growth.
  • Empowers USAID to identify and prioritize loan and grant proposals that increase electricity access in Africa.
  • Directs the Department of the Treasury to use its influence to encourage the World Bank and the African Development Bank to increase investments in electricity access.
  • Requires OPIC to expedite and prioritize loan applications for investments in energy projects.
  • Instructs the U.S. Trade and Development Agency to promote private sector investment with a focus on clean energy.

Washington Post columnist Michael Gerson applauds the across-the-aisle support of the bill stating:

[The bill] also demonstrate[s] the bipartisan appeal of market-oriented development policy. There is every reason for Republicans to support efforts that encourage economic independence, strengthen trading partners and compete with Chinese influence in a vital region.

At this time, a Senate version of the bill has yet to surface.

Student in South Sudan studying by flashlight. Photo: Cassandra Nelson/MercyCorps

Go to Source

Tags: ,

Coordinated reform efforts are key to develop the East African Community


Business reforms can spur economic dynamism in the East African Community

East Africa is famous for its breathtaking landscapes and its unique concentration of wild animals. Could it also become as famous for its dynamic economic development?

In 2009 I came to Tanzania to work on tax harmonization in the East African Community (EAC). The Common Market Protocol was about to be signed and one of the biggest goals was to tap into the economic potential of the region by facilitating (cross-border) trade and improving the business climate. A year later, the five Partner States of the East African Community ratified the Common Market Protocol in order to realize “accelerated economic growth and development through the attainment of the free movement of goods, persons, labor, the rights of establishment and residence and the free movement of services and capital”. The overarching goal of the East African Community is to achieve sustainable economic growth in order to increase employment and reduce poverty.

Go to Source

Tags: , ,

Social Innovation Creates Prosperous Societies

By Kevin Chika Urama & Ernest Nti Acheampong

SUPPLEMENT TO SSIR FUNDED BY THE ROCKEFELLER FOUNDATION

Rarely has the need for new ways of
thinking been more glaring. From
the sluggish economic growth and
financial instability of the last several
years to the perennial issues
of political upheaval, resource crises, hunger,
poverty, and disease, people have come
to realize that the old ways of doing things
no longer work. Whether one lives in the developed
or the developing world, the fates of
Asians, Africans, Europeans, and everyone
on the planet are inextricably linked.

We are in desperate need of a fundamental
transformation of social, economic, and
cultural arrangements. The old paradigm
of government aid is simply inadequate to
the challenge. What we need instead are
creative and innovative solutions for fostering
sustainable growth, securing jobs, and
increasing competitive abilities.

All over the world during the past decade,
there has been a phenomenal surge
of interest in social innovation as a way to
achieve sustainable economic growth. In
the United States, President Barack Obama
launched the Social Innovation Fund,
which makes grants to intermediaries that
then seek out and fund promising programs.
In South Korea, Seoul Mayor Park
Won-Soon is integrating social innovation
approaches into city government [see
Forging Ahead with Cross-Sector Innovations”]. In Europe, the European
Commission issued recommendations for
fostering social innovations and expanding
them across the continent. In the United
Kingdom, initiatives such as Big Society are
designed to find and scale up the best social
innovations. And in Japan, social innovation
is rapidly taking root in the rebuilding
efforts following the 2011 tsunami and
nuclear disaster, which left immeasurable
destruction on the country’s physical, cultural,
and socio-political landscape.

Social innovation is helping to solve
some of the world’s most pressing problems
with new solutions such as fair trade,
distance learning, mobile money transfer,
restorative justice, and zero-carbon housing.
In the process of creating solutions, it
is also profoundly changing beliefs, basic
practices, resources, and social power structures.
Social innovation provides a unique
opportunity to step back from a narrow way
of thinking about social enterprises, business
engagement, and philanthropy and to
recognize instead the interconnectedness
of various factors and stakeholders.

In Africa, we have made considerable
advances in social and economic growth over
the past 10 years. Between 2005 and 2008
Africa’s gross domestic product (GDP) rose
at a 5.5 percent annual rate. It slowed to 2.4
percent in 2009, mainly because of the global
economic recession. But unlike most other
regions, Africa has made a rather rapid recovery
since the downturn. Average GDP is
expected to grow at a nearly 6 percent rate in
2012. Amazingly, Africa is now regarded as the second-fastest-growing continent, after
Asia. This acceleration in Africa’s economic
growth reflects fundamental improvements
in macroeconomic policies, an improving
business environment, and growing political
stability in many African countries.1 Equally
important, but less recognized, reasons for
the African success story are an increased focus
on science, technology, and innovations
to drive economic growth, and an increased
focus on social innovations and social engineering
to improve human well-being.

Organizational, technological, and social
innovations are becoming the norm
among African youths and women, driving
social change and economic development
from the grassroots. With the rising African
economies, we are witnessing increasing
demand for other important transitions:
from research and development (R&D) to
research for development (R4D); and from
technology transfers to the development of
endogenous scientific and technical skills
and knowledge that drives social change,
especially in the area of information and
communication technologies. Social innovations
are adding an extra dimension to
help sustain the African miracle, providing
the social capital needed for economic and
social growth.

What Makes a Truly Prosperous Society?

Prosperity can be defined as a successful,
flourishing, or thriving condition, especially
in financial respects. How, then, does one define a prosperous society? And how does
one measure whether a society is prosperous?
If we are talking about economic prosperity,
we can readily invoke the classical
macro-economic measure of GDP.

Measuring a prosperous society as a
whole, however, is more complex. To describe
a society as truly prosperous, we
must see several other elements besides
robust GDP growth, such as peace and happiness,
economic and financial well-being,
and individual freedoms and liberties. In
other words, a prosperous society consists
of economic prosperity and social prosperity
combined.

An exemplar of a prosperous society is
the United States in the two decades following
World War II. During this time the
country enjoyed strong economic growth
coupled with several significant new industries,
including electronics, aviation, plastics,
and frozen foods. The United States
grew by embracing technology and taking
advantage of the confidence bestowed by
free market capitalism and democracy.
Because of all the new wealth that was created
and because of the social structures and
political policies that existed (for example,
strong unions and high income taxes), the
prosperity was shared among all segments of society. More middle-class jobs meant
increased wages and more people who
could afford housing and leisure, fueling
the demand for consumer goods. Socially,
the United States became an extremely materialistic
society. The period also marked a
population boom and the burgeoning of the
civil rights movement, which would later
have enormous repercussions on the US
political and economic system.

Societies that enjoy economic affluence aren’t truly prosperous if that affluence benefits only a privileged few, rather than
being spread throughout society. That’s because
social and economic prosperity are
intricately linked and highly dependent on
each other. Social prosperity requires conditions
like good health, well-being, access to lifelong learning, social inclusion, safety,
security, and citizenship. Economic prosperity
requires conditions like workforce
development, job creation, fiscal responsibility,
a green economy, infrastructure development,
and energy access. Effective coordination
and collaboration between the two will
result in a lasting social fabric that supports
sustainable prosperity and self-reliance.

Social Innovation and Economic Growth

Economists estimate that between 50 and
80 percent of economic growth comes from
innovation and new knowledge.2 In East
Africa, for instance, the development of
M-PESA (a mobile money payment system
born out of social innovation) has become
an avenue for 9 million people to gain access
to secured financial exchange services.
This African success story has completely
revolutionized the regional business terrain,
at the same time empowering local
people by providing an easy-to-use and
readily available banking service that hitherto
was impossible to access because of
a poor banking infrastructure and a strict
regulatory framework.

Social innovation has become even
more important for sustainable economic
growth in recent times. This is partly because
some of the barriers to lasting and
sustainable economic growth (such as climate
change, youth unemployment, aging
populations, and increased social conflicts)
can be overcome only with the help of social
innovation, and partly because of rising demands
for alternative models of economic
growth that enhance rather than damage
human relationships and well-being.

Phrases such as inclusive green growth,
a green economy,
and decoupling economic
growth from social and environmental impacts

have become regular parlance in
mainstream economics and global institutions
such as the World Bank and United
Nations agencies,3 as emerging paradigms
to push the sustainable development agenda Getting these paradigms more widely
adopted requires new public policy that addresses
social needs along with economic
needs. Society can no longer use GDP alone
as the barometer of progress.

Africa, and in many ways the entire global
community, is transitioning to a phase
where innovation will no longer be shaped
by industries but will rather be informed by
markets and society’s demand for products,
systems, and services focused on knowledge
and learning. Against this backdrop, businesses
are looking to social entrepreneurs
and social enterprises that pursue financial
sustainability and social principle for guidance
and new techniques.

One interesting social enterprise that
exhibits these characteristics is Ungana-Afrika, an NGO helping to catalyze the incubation
of scalable enterprises that leverage
pioneering technologies for the benefit of
emerging markets and under-served communities.
This social enterprise operates
on the premise that innovative technologies
are not by themselves sufficient to
transform the development landscape in
Africa. They need to be sustained by innovative
business models that are rooted in the
social context of disadvantaged but vibrant
communities.

Social innovations and enterprises such
as Ungana-Afrika are playing pivotal roles in
economic growth by opening up new markets
that require social solutions, by expanding
institutions that orchestrate and are focused
on adapting social innovations, and by compelling
the emergence of new innovations.
Another example, which grew out of the
need to reduce waste and diminish landfills,
is Freecycle Network, based in the United
States.4 Freecycle matches people who have
things they want to get rid of with people who
can use them. It now has 5 million members
in 85 communities worldwide. Or consider
AfroVumbua, in Kenya, which helps innovators
in Africa connect with global investors
looking for technological opportunities in
Africa. There is also Open University, based
in the United Kingdom, and other models of
distance learning that have made education
much more widely available.

Other examples of social innovation can
be found in fields as diverse as integrating
marginalized populations into the formal
economy and involving citizens in public
decision-making. The KiberaNet wireless
information and communication network brings education, empowerment, and opportunities
to more than 2 million slum
dwellers in Kibera, Kenya, using fiber optic
cable and solar power. DadaabNet does the
same for refugee camps. This is a model for
empowering informal settlements (slums)
and refugees to take control of their lives
and to nurture sustainable development.

The rise of social entrepreneurs and social
enterprises is not only contributing to
the mobilization of people in the innovation
process but also providing the impetus for
economic growth and social equality.

Integrating Social Innovation with Science, Technology, and Innovation

Governments can improve the climate for
innovation and foster the growth of science,
technology, and innovation in many
simple ways. In Finland, for example, the
government’s main advisory body on science,
innovation, and research (SITRA)
has recommended that innovativeness
should be made a criterion for competitive
bidding in public procurement. They also
recommended that a portion of funding for
government departments should be clearly
designated for innovation and development
activities, which are widely interpreted to
include innovation in services.

Social innovation has the rich yet unexploited
potential to foster science, technology,
and innovation development in Africa.
Most of the current social innovation initiatives
in Africa have been established at
the grassroots level, with minimal capacity
for influencing decisions at higher levels.
For instance, in the agricultural sector, we
have seen innovative applications such as
M-Shamba and Farmerline, created at the
grassroots to provide salient information
for farmers on agricultural best practices
and minimization of climate change effects.

We need greater recognition by African
governments and institutions of the fundamental
role of social innovation in science and
technology on Africa’s development agenda.
Fortunately, we are beginning to see the integration of social innovation into the research
activities of institutions such as the Council for Scientific and Industrial Research, South
Africa. It has initiated a low-income housing
research project commissioned by the
Department of Science and Technology to
provide good-quality, affordable housing for
low-income South Africans. Some academic
institutions, such as the University of Cape Town, have created centers for social innovation
and entrepreneurship to promote and
embolden social and environmental change
agents. The faculties of the University of Botswana, the University of Nairobi, and
Cape Peninsula University of Technology
have made efforts to connect to global networks
of social innovators, resulting in the
establishment of social innovation labs.

Conclusion

Many of the most important social challenges
facing the world require radical innovation
that cuts across organizational,
sectoral, and disciplinary boundaries. These
challenges require innovative ways of applying
new technology along with new forms
of organization, new network processes
to build human and social capital, and new
grassroots-based solutions. The good news
is that social innovation is a remarkably creative
field. It is growing in popularity and is
having a global impact. Unfortunately, it is
still a nascent field, only beginning to take
shape and move beyond anecdotes.

Although it is gratifying to note that social
innovation has attracted a great deal of
interest worldwide, five areas require attention
if we are to unleash even more innovations
for social and economic prosperity:

  •  Social innovation needs to be explicitly taken into account when we are formulating science, technology, and innovation policy. To ensure that innovation benefits the entire society, these policies must establish democratic platforms where diverse actors can participate.
  • To ensure the successful implementation of social innovation activities in different countries, we need proper coordination and integration of these activities in national and regional socio-economic planning.
  • Education and research in science, technology, and innovation must go beyond focusing on elite science and begin to support science that is focused more directly on meeting diverse social needs.
  • Social innovation can be successful only if there is sufficient capacity to scale up the innovation. Rejuvenating the social base through a heavy investment in capacity building, and creating a platform conducive to interaction and collaboration, are prerequisites for social innovators to prosper.
  • Public-private partnerships play an important role in supporting social innovations. Strengthening these global partnerships and platforms can be effective for understanding and fostering social innovation worldwide.

Emerging economies in Africa are encouraging
investment in large industrial
enterprises, but it’s equally important to invest
in the smaller social enterprises that are
becoming an integral part of the economy,
mimicking the true African society—a focus
on communities, people, and social structures
as measures of prosperity. By encouraging
social innovation, policymakers strive
to pursue a triple triumph: a triumph for society
and individuals by providing services that
are of high quality, beneficial, and affordable
to users and that add value to their daily lives;
a triumph for governments by making the
provision of those services more sustainable
in the long term; and a triumph for industry
by creating new business opportunities and
new entrepreneurship.

Go to Source

Tags: , ,

Africa is finally booming, but don’t break out the champagne yet

Africans are celebrating levels of economic growth and political stability that were unthinkable just 10 years ago, but without the appropriate economic and political reforms, the continent could quickly relapse. Beyond its usual calls for political reform, a recent Economist article urges Africans to work faster to diversify their economy and promote trade: Read more

Tags: , , , ,