Global Entrepreneurship: March 2006 Archives

Globalization has become synonymous with unchecked corporate and political power that hurts average citizens around the world. But in a speech this past week to the World Summit of Young Entrepreneurs, Abdel Hamid Mamdouh, director of Trade at the Services Division of the World Trade Organization (WTO), offers a very different view when globalization is viewed in terms of the emerging entrepreneurial economy.

From the Brazil-Arab News Agency:

According to Mamdouh, the WTO sent him to the meeting as their representative due to the theme, which is the liberalization of trade and is of great interest to the organization. To him the objective "is to liberalise trade as it is newly defined, to encompass movement of capital and movement of people, to liberalise it through agreements between governments, in order to open up new investment opportunities for entrepreneurs, to open their horizons."

Mamdouh called globalization one of the great facilitators of entrepreneurial activity in today's economy.

Mamdouh stated that the current generation of entrepreneurs is the best that the world has ever seen. "IT and technology have greatly helped entrepreneurs supplying them with tools that did not exist in the past, providing them with information about markets that were not available for previous entrepreneurs. Their work is simplified by market globalisation and by the reduction of barriers between countries," stated the Egyptian.

A new study conducted by the UCT Graduate School of Business and just released by the Global Entrepreneurship Monitor finds that South Africa is falling behind in the global entrepreneurial economy.

The latest data shows that the South Africa’s entrepreneurship ranking has dropped from 20th position (out of 34 countries) in 2004 to 25th position (out of 35 countries) in 2005. And the country's Total Early-stage Activity (TEA) was only 5.1% in 2005, down from 5.4% in 2004. Significantly, South Africa also has the lowest entrepreneurial activity rate of all the developing countries participating in GEM.

The authors suggest that government policy in South Africa needs to shift its policy away from wealth redistribution toward more support of entrepreneurial activity and the jobs it creates.

Given our high levels of unemployment and the indisputable relationship between unemployment and poverty, we would argue that job creation should supersede poverty alleviation, not as a national objective, but as an SMME objective. Job creation in itself is the most effective, sustainable strategy within the context of SMME policy that could alleviate poverty and reduce inequality.

I would go one step further in this recommendation. I would suggest that attention to supporting entrepreneurial activity should replace South Africa's focus on wealth redistribution. Their policies have proven to decrease total wealth by creating a zero-sum game between the rich and the poor. By focusing on entrepreneurship, more wealth will be created by a much broader number of South Africans of all ethnic backgrounds.

Decrease government regulation of small business, cut taxes, and improve entrepreneurial and economic education is the formula to improve South Africa and all developing nations for generations to come.

(The GEM studies are supported in part by Babson College).

Based upon survey data from more than 107,400 respondents in 35 countries, today's GEM Women report, prepared by scholars at the Center for Women's Leadership at Babson College, gives a clear indication that while women entrepreneurs often exhibit patterns of behavior similar to those of men, a gender gap nonetheless exists for entrepreneurial activity across the globe.

Women most likely to be entrepreneurs are those who hold jobs, have higher levels of household income and education, and have confidence in their level of skill and in the possibility of their success.

For the first time, GEM divided countries into middle- and high-income clusters, on the basis of per capita gross domestic product (GDP), and identified entrepreneurs by stage of business process. The report found that women's businesses in high-income countries are just as likely to survive and thrive as men's. It;s a different story in the middle-income cluster where the survival rate is significantly lower than that of a man's business. Also, young women (25 to 34) are more active in 'early-stage' enterprises in middle-income countries while women 35-44 are the most likely to lead 'established' businesses.

Despite these encouraging signs, a gender gap nonetheless persists. On average, men remain nearly twice as likely as women to start a new business. In high-income countries, the gender gap is greatest, while in middle-income countries it narrows somewhat.