Millions of young people around the world enter the workforce with high hopes for a successful career yet they cannot find jobs. Although for sure a lack of needed skills contributes to this problem, something else is responsible for persistently high unemployment in many countries. What is preventing all the economic potential of the “generation in waiting” from being tapped? Nobel Laureate Douglass North provides the answer: countries with sustainable economic growth trajectories are able to establish institutional structures that allow them to move from personal interactions to impersonal exchanges, or in other words to provide an enabling environment for conducting business.
In this Feature Service article CIPE’s Director for Policy Reform Aleksandr Shkolnikov explains the importance of building entrepreneurial economies. He says, “The link between entrepreneurship and institutions is not immediately obvious. When we think of successful entrepreneurs we think of innovators, risk-takers, or people with great ideas exhibiting determination, hard work, and dedication. But in entrepreneurial economies, individual skills are not the only thing in play – the rules within which interactions occur matter just as much, if not more.”
Article at a Glance
Traditional approaches to promoting entrepreneurship focus too much on individual skills-building at the expense of institutional reforms needed to remove barriers to doing business.
Through institutional reform it is possible to empower entrepreneurs to transition from micro-enterprises to small and medium-sized business that can create jobs, innovate, take advantage of economies of scale, and increase productivity.
Private sector organizations can play a vital role in removing barriers to entrepreneurship through public policy advocacy and community engagement.
If you’ve ever been to Casablanca, you may have noticed there’s a dearth of green spaces. Art deco buildings blend harmoniously with the roar of mopeds and red petit taxies, yet parks seem almost nonexistent. It’s rumored that Morocco’s longtime Interior Minister, Driss Basri, sold land designated for parks at discounted rates to his close friends. Basri, known as the vice-king, was also famous for diverting large sums from the state’s budget for the development of his hometown just south of Casablanca, Settat. Was Basri corrupt? He sure was. Is using one’s position of authority to reward those closest to you also corruption? That depends on who you ask. Read the rest of this entry »
Over the past few decades, women’s empowerment has grown dramatically as a focus for economic and democratic development. The importance of women’s participation in the social, political, and economic atmospheres has gained increasing recognition as an integral unit that helps drive development.
Even though women constitute half of the world’s consumers, business opportunities and economic development for men and women were not created equal. Sometimes, laws or customs restrict women’s access to property rights and the skill-building resources necessary to actively participate in politics or business. CIPE’s work in women’s participation and entrepreneurship provides women with the tools and training programs that will help them take part in successful economic development. On the CIPE Development Blog, women are active participants and frequent subjects of success and development (at least one women’s chamber of commerce has been both), demonstrating that innovation and gender equality will continue to drive global economic and democratic development: Read the rest of this entry »
Entrepreneurship has had a great 2010 to maintain the rise of interest in the topic over the past two years. Google Trends, for example, shows a sharp increase in searches that include all or part of the word ‘entrepreneur‘ beginning in January 2009.
Corruption isn’t a new issue for business communities around the world. What’s new is increasing discussion about how it might be stopped.
As one of many signs of growing debate, in September 2010 the Wall Street Journal launched its Corruption Currents blog, providing news, analysis, and commentary from the ever-changing world of corporate corruption. On the CIPE Development Blog, corruption and its discontents have also been turning up the volume. Here are a few highlights from the past year’s posts on corruption: Read the rest of this entry »
The holiday season is once again upon us. Ever since my childhood the season has been marked by several classic films. Once I began to travel I understood that it is common around the world to spend some of the holidays with old classic holiday favorites. In the United States, perhaps the most famous holiday film is It’s A Wonderful Life. The film offers food for thought on morality, faith, community, and small business. Read the rest of this entry »
While discussions of informal economies have become a prominent part of today’s debates in international development, perspectives from private sector associations are not pervasive. As conglomerates of formal businesses, however, those groups can provide a unique perspective on the topic.
Youths’ perceptions of informal economies also provide enlightening insight on the future of informal business. Through CIPE’s ChamberL.I.N.K.S. program, CIPE staff recently had the opportunity to sit down with young leaders from private sector associations around the world. While we meant to speak broadly about entrepreneurship in the participants’ home countries of Bangladesh, Brazil, Russia, Sierra Leone, Sri Lanka, and Tanzania, one topic in particular kept reappearing in our conversation: informal sector businesses (those that provide lawful goods and services without legal registration or license.) Read the rest of this entry »
Imagine you’re a policymaker in a low-income country seeking to attract more foreign direct investment (FDI).
Perhaps you’ll target run-of-the-mill investment bankers looking for some emerging markets action to boost their performance for the year and get that bonus they’ve been craving. Or there might be a major international IT firm or a manufacturing conglomerate looking to break into a new market or tap into a new supply chain. You might even seek out impact investors looking for pro-poor business models with explicit social goals as well as economic.
No matter what kind of investor you want to attract, there are many institutional factors that affect all foreign direct investment just the same, and many of these factors are now captured in the World Bank’s new Investing Across Borders(IAB) indicators. Read the rest of this entry »
A new JP Morgan report dubbed Impact Investments as a new asset class.
Impact investing has grown much in the past ten years, to the point where JP Morgan declared it a new asset class on November 29. To paraphrase JP Morgan, impact investments refer to debt or equity investment for small yet scalable businesses with an explicit social intent–mainly to include the poor as contracted suppliers, employees, or final consumers and to account for environmental and ethical responsibility. As impact investors continue to further define and standardize what ‘impact’ means exactly, and how to measure it, at least one outcome matters dearly to strengthening democracy: impact investments disperse economic power, and in so doing intentionally or unintentionally disperse political power. Read the rest of this entry »
The private sector plays an important role in sustainable democratic and economic development. By creating jobs and opportunities, providing necessary goods and services, and thus improving people’s living standards, private enterprise in a market economy offers citizens the ability to prosper independently of state-provided goods and services. That, in turn, gives citizens the necessary leverage to hold their government accountable because public officials rely citizens for support, not the other way around.
An accountable and efficient public sector is still a necessary part of development, though, and governments and private businesses must work together in this regard. Usually that entails efforts to ensure a sound business environment for the private sector to thrive, and an important part of any country’s business environment is the structure of the tax system. Read the rest of this entry »
Corruption undermines market economies by creating an uneven playing field that favors those businesses that will pay bribes in their operations – and greatly disadvantaging those businesses that refuse. Not only does that raise the cost of doing business, but it undermines a market economy in which all actors have an opportunity to participate. As Michael Hershman states in this video, businesses can play an important role in fighting corruption by working with civil society and other private sector organizations to collectively condemn participation in corruption. Read the rest of this entry »
Seven years ago, the UN General Assembly designated December 9 as the International Anti-Corruption Day. One of the underlying reasons for doing this was to promote the UN Convention against Corruption (UNCAC) as an effective anti-corruption tool.
UNCAC goes a long way in laying out a series of concrete and important steps that governments must put into place to improve transparency and increase international cooperation in going after corrupt public officials. It is putting pressure on governments to go beyond talking about corruption and at least do something about it.
Yet, as Michael Hershman, CIPE’s Board Member and co-founder of Transparency International, notes in his interview with us – that is not enough. The private sector should and can play an active part in fighting corruption. In fact, he argues that companies are better positioned than governments in many corrupt countries to lead anti-corruption efforts. Why is that the case? You’ll have to watch the interview to find out:
There are two things you always come across when talking to people about corruption. Everyone thinks their country is unique, that corruption has certain cultural underpinnings. Yet you can also see that corruption is quite similar across the world, whether you are in Asia, Africa, Middle East, Eurasia, or Latin America.
In fact, people may not speak the same language, but they speak the language of corruption – in talking about it, sometimes, no words are needed.
With all the buzz on corporate social responsibility, or corporate citizenship, it’s easy to lose track of the real world examples of companies engaging in responsible business practices in their everyday activities. Even as companies pledge their adherence to such principles by signing agreements such as the United Nations Global Compact (UNCG), good corporate citizenship extends beyond statements and declarations. It requires firms to make their commitment to social responsibility an integral part of corporate strategy.
This Economic Reform Feature Service article shows how six firms of different sizes and from different sectors use one tool, the SA8000 global social accountability standard for decent working conditions, in applying corporate citizenship principles to their everyday practices. Read the rest of this entry »
Yet, as the experience of IKEA in Russia shows – compliance is not enough. Ikea had a zero tolerance policy against bribery and a rather strong compliance program, but the corrupt environment proved too difficult to overcome. Operating in highly corrupt countries (i.e. many of emerging and developing markets according to TI’s corruption perceptions index) presents a unique set of risks and challenges that can’t be addressed only by saying no to corruption.
So what can be done to complement strong compliance programs? John Sullivan and I look at some solutions – collective action against corruption and the role of business associations – in this article published in the Ethisphere magazine.
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There is a growing interest in what the private sector can do to fight corruption. In part, it is driven by the
