The Economist on Entrepreneurship

The March 14, 2009 issue of the Economist has a special report on the role of entrepreneurship around the globe.  I had to chuckle about their seemingly new-found "discovery" of entrepreneurship. And while some of the information is rather dated, especially in their background pieces, there are some interesting articles. 

"Lands of Opportunity" looks at the emergence of entrepreneurship in Israel, Singapore and Denmark:

...[T]he governments of all three countries remain enthusiastic supporters of the entrepreneurial idea. The Danes and the Singaporeans regard it as their ticket to success in a global economy and the Israelis as a matter of survival. All three are also helping to spread the creed in their regions. Arab countries are beginning to realise that the best way to deal with Israel is to copy its vibrant economy. Denmark serves as a model to European leaders such as France's Nicolas Sarkozy who want to combine dynamism with social protection. The Chinese regard Singapore as a useful laboratory for reform. In the 1980s China asked Goh Keng Swee, Singapore's former finance minister, to advise on the development of its special economic zones; today it is keeping a watchful eye on the city-state's model of state-sponsored entrepreneurship.

"Magic Formula" seeks to uncover the ideal government policy to encourage entrepreneurial growth.  Interestingly, education and immigration were cited as the keys to high growth ventures:

The first is a vibrant higher education system. Business is increasingly dependent upon knowledge, particularly technical knowledge. Some 85% of all the high-growth businesses created in America in the past 20 years were launched by college graduates. University research departments have helped to drive innovation in everything from design to entertainment.

The second is openness to outsiders. Emigrés have always been more entrepreneurial than their stay-at-home cousins: the three most entrepreneurial spaces in modern history have been the ones inhabited by the Jewish, Chinese and Indian diasporas. In today's knowledge economy educated émigrés are at the cutting edge of innovation. They create more firms than regular folk; they circulate ideas, money and skills; they fill skills gaps; and they mix and match knowledge from different parts of the world.

"Saving the World" recognizes the growing trend of entrepreneurship being used to address social issues.  Interestingly, the author in the end acknowledges that the most significant impact entrepreneurship can have is as an engine of job and economic growth. 

In the long run, however, the best thing that entrepreneurs can do for the poor may be simply to see them as workers and customers. A rising number of Western companies are pursuing what C.K. Prahalad, a management professor at the Ross School of Business at the University of Michigan, calls "the fortune at the bottom of the pyramid". Businesspeople have realised that billions of pennies can add up to a lot of money. Cemex, an innovative Mexican cement firm, employs thousands of poor Mexicans. Casas Bahia, a Brazilian retailer, specialises in serving poor customers. India's ICICI Bank uses technology and customer service to reach poor rural Indians.

But, my favorite article in this special report is the final one, "The Entrepreneurial Society," which concludes that entrepreneurial economies work better than managed economies. 

"Every generation needs a new revolution," Thomas Jefferson wrote towards the end of his illustrious life. The revolution for the current generation is the entrepreneurial one. This has spread around the world, from America and Britain to other countries and from the private sector to the public one. It is bringing a great deal of disruption in its wake that is being exaggerated by the current downturn. But it is doing something remarkable: applying more brainpower, in more countries and in more creative ways, to raising productivity and solving social problems. The "gale" that Schumpeter celebrated is blowing us, a little roughly, into a better place.

Unfortunately, Washington seems to be full of counter-revolutionaries who wish to move us toward a managed, socialized economy.  As I have argued often, "socialized entrepreneurship" never works over the long-term -- It is the ultimate oxymoron.