Social Entrepreneurs and Globalization
What Underlies Mexican Entrepreneurship?
by Ernesto Zedillo,
former president of Mexico.
Historically, this lesson is clear: economic growth reduces poverty more than anything else, and a flourishing private sector is a key contributor to sustained economic growth. Why then, considering the urgent need to lift billions of people out of poverty, has entrepreneurship not been unleashed to its full potential in many parts of the developing world?
The answer, of course, is not that there are no entrepreneurs in poor countries. In fact, the release of
entrepreneurial activity previously repressed or dormant is an important part of the recent success stories of rapid growth and poverty alleviation. Furthermore, even in countries where growth has stagnated and poverty has risen in the last two decades, millions of men and women keep their families from starving to death only through the entrepreneurial activities they undertake--albeit very precariously--every day.
Go to any shantytown or village in a developing country and you'll find small entrepreneurs working hard to provide for their families' subsistence. As useful as this version of the private sector--usually known as the informal economy--is in providing some employment and income to large masses of people, it isn't enough to defeat their poverty. As
Hernando de Soto, the Peruvian economist, has lucidly and frequently explained, informal businesses are constrained to operate in very small markets, usually the local community; consequently they are unable to reap the rewards of productivity and competitiveness that stem from economic specialization in the wider marketplace. Typically, the poorer a country is, the bigger the proportion of its overall economy will be held by its informal economy.