Good Governance in Africa

This award (and its “failure”) is illustrative of what I briefly alluded to in class re: the importance of good governance to the development of a framework that can support entreprenuership:

“Again, No African Leader Wins Annual Good Governance Prize”

“The foundation made public on Monday its annual assessment of the state of African governance, concluding that while “overall governance continues to improve at the continental level,” aspects of life in Africa like personal safety and the rule of law had “declined worryingly.”

See also, Transparency International, a NGO that seeks to improve governance and development by documenting corruption around the globe. Look how “bad” Africa is.

It is also worth noting there that FDI actively STEERS AWAY from risk (including political risk). It is no surprise, then, that many African countries can not attract FDI (and the R&D, technology, etc., gains that can come with foreign investment).


High Growth Entrepreneurship

I thought this article’s distinction of “high growth” entrepreneurial activities was interesting. This seems to tie in with the Kondratieff Cycle reading in that we need to find somehow to replace the large number of jobs that may be destroyed during the creative destruction process. By focusing the efforts of both the private and public sectors on this high growth entrepreneurship, we may have a more targeted approach to quickly creating a larger number of jobs than we would by focusing on lower growth entrepreneurship. The private sector can organize wealth and funding for these types of ideas and the marketplace can decide which ones are truly “high-growth.” The public sector can then create enabling legislation that ties in with much of the ideas listed in the article for today’s class (R&D, Tech transfer, funding etc.)

Comments Zoltan Acs, “How Is Entrepeneurship Good For Growth?” in light of “What Are We Doing Here?” documentary

Acs argues that necessity entrepreneurship has no effect on economic development while opportunity entrepreneurship has a positive and significant effect. This finding, he suggests, tells us something important about the role of entrepreneurship in relation to the national economic growth for less developed countries–namely that “[l]ess developed countries need to strengthen their small and medium sized [business] sector[] before focusing on the entrepreneurial framework conditions.” (104). This same conclusion was implicitly put forth in “What Are We Doing Here?” when the economist-turned-farmer suggests that the key to rising out of poverty is supporting enterprises that can hire and pay wages (as opposed to the “necessity entrepreneurship” discussed in Acs and demonstrated by the tomato selling women in the aforementioned film). While this argument makes sense on its face, it also appears to be made inside a vacuum. By this I mean that necessity entrepreneurship may not appear to have any effect on economic development because external factors—such as poor governance, no government safety nets, lack of business training, etc.—do not allow for the “necessity” to turn into “opportunity.” More importantly, necessity entrepreneurship may provide training and business experience that can be translated into opportunity entrepreneurship, or simply worker productivity, when the governance and business climate becomes hospitable for such enterprises. Accordingly, I do not think that the least developed countries (or at least the global civil society and IOs seeking to help them) should stop focusing on entrepreneurial framework conditions as Arc implicitly (if not explicitly suggests)—even if it means supporting necessity entrepreneurship.

As alluded to above, I fundamentally disagree with the proposition that necessity entrepreneurship does not play a positive role in the least developed countries. Anyone who has spent time studying the history of economic development (or lack thereof) on the African continent knows that the framework for supporting “opportunity entrepreneurship” and small-and-medium sized businesses is wanting in many, if not most, AU countries. Neopatriamonialism, the legacy of colonialism, government corruption, civil war, ethnic conflicts, and the absence of the rule of law make the type of entrepreneurship–and supporting framework—that Acs speaks of a luxury in such places. While Acs does acknowledge this briefly on page 104, the filmmakers of “What Are We Doing Here” seem to ignore this fact and instead point out “all that is wrong” with foreign aid without acknowledging the unique historical background that complicates development throughout many African countries: Yes, it would be lovely if the least developed countries could enhance their SME infrastructure. The reality is, however, that the “good governance” reforms promulgated by the World Bank and IMF need to “stick” before such economic reforms will really have an effect on the economy. Until then, necessity entrepreneurship (supported by the West through platforms such as USAID, DFID, WFP, Kiva, etc.) must continue to play a role in local economies. I agree with Acs’ argument that countries relying on necessity entrepreneurship will not be able to lift themselves up by their bootstraps; I do not agree, however, that necessity entrepreneurship has no effect on economic development. At the very least, such entrepreneurship gives aid in a productive way and teaching way until the necessary macro-level governance and structural features are implemented.

On a side note/comment about the documentary, “What Are We Doing Here” does, in my view, do nothing to contribute to the dialogue on aid and development. The shortcomings and/or corruptive effects of foreign aid in Africa are well documented. In fact, I found the filmmakers ignorance almost offensive at various parts—everything they “learned” on their trip was available to them beforehand (Westerns have been on the African continent since…well, we all know about colonialism…). Granted, nothing teaches or influences as well as firsthand experiences, but I do feel like the documentary would have actually contributed something to the discussion had they been able to provide an informed commentary on the situations they encountered on the road. Instead, the movie ends just as it begins…musing about why we are in Africa. No suggestions, agenda, etc. are offered.

Entrepreneurs and managers do think differently

This article discusses an MIT study, which showed that when making “explorative choices,” self-described entrepreneurs were more likely to use both the right and left sides of their frontal cortex than self-described managers, who used mainly the left side.  The left side of the brain is associated with logic and structured thinking, and the right side is associated with creativity and emotion.  The question now is, do entrepreneurs’ brains function this way because of the kind of decisions they are making, or are people with these more coherent brains more likely to become entrepreneurs?

Youth Entrepreneurs

This is an interesting article on the overlap of necessity entrepreneurship and the hot topic, quintessentially American problem of unemployed 20-somethings.  While young entrepreneurs could spark much-needed American economic growth, I wonder what effects our generation might have if we can/do oversaturate the market.  And how government and infrastructure can influence or drive youth entrepreneurship.  The end of the article also poses a few useful questions for considering the issue through a legal and policy perspective.


Interesting Concept: Bridge International Academies

I think this is a very interesting concept. I think this could be a future template on how more good can be done. Like the video showed last week NGOs and government aid do not always get the job done, partially because they are not stakeholders. The concept of social entrepreneurs could change everything. this is a for profit company that operates schools in Kenya. They have made some good progress and appear to be doing well. The NPR criticizes the fact that they are for profit however I think you wouldn’t get the same level of resources in a non-profit.