Entrepreneurs and the State
Entrepreneurs and the State
The World Bank's study on the East Asian "miracle" gave some of the credit for East Asia's (including Thailand, Indonesia, and Malaysia) success to the relationship between entrepreneurs and the state. In particular, states were said to have engaged in productive discussions with their entrepreneurs, receiving and giving guidance on industrialization. While this does seem to characterize the northern tier of Asian countries, with Japan as the foremost example, this kind of consultation has been nascent at best in Southeast Asia. Yet the countries there have made some efforts to institute consultative mechanisms. Malaysia is probably the furthest along in this regard, and its major formal consultations only began in 1991. As of 1993, Indonesia had no formal government-business links for policy coordination, and although Thailand did establish such links, there is considerable debate over whether or not they have been effective.
States also have the option of direct intervention to promote entrepreneurship. Again, both regions have attempted to "indigenize" their productive base. The Southeast Asian countries seem to have been more serious about using government to provide a boost to indigenous entrepreneurs. For example, Indonesia promoted indigenous investment in oil sector support services by closing certain services to foreign investment and allowing only indigenous firms to bid. The government also promulgated "buy Indonesian" procurement regulations for all government agencies in 1980. In Malaysia, where the state was "relatively autonomous from the dominant foreign and Chinese business groups," its desire both to promote Malay interests and larger-scale projects led to joint ventures between state enterprises (with shares held in trust for Malays) and foreigners. While the government could have promoted subcontracting to build up the capacity of the small and medium-size entrepreneurs in Malaysia, most of these entrepreneurs were Chinese, and thus the state chose the option of creating "a new Malay business and managerial class." Indonesia did institute a program to support small and medium-size enterprises, but "largely because of weak institutional capabilities" these programs have not been very successful.
Recent work on industrial clusters, districts, and regions such as Baden Würtenberg in Germany, Sakaki Township in Japan, and Emilia Romagna in Italy point to the important influence of regional and municipal governments, in addition to, or instead of, national governments, in providing an enabling environment, establishing supportive institutions and public goods, and encouraging industrialization. There is, however, little evidence that regional and municipal governments have had this kind of nurturing role in either Southeast Asia, or Subsaharan Africa.
By: Deborah Bräutigam
Local Entrepreneurship in Southeast Asia and Subsaharan Africa: Networks and Linkages to the Global Economy
School of International Service
American University
Washington, DC
Entrepreneurs and the State - To learn more about this author, visit United Nations University's Website.
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Entrepreneurs require an "enabling state" to provide the policy framework, supportive services, and the public goods of a social and physical infrastructure. Government officials are more likely to support their entrepreneurs if they can identify private sector industrialization as being in their interest. Both Southeast Asia and Subsaharan Africa have had challenges in this area. For example, James Jesudason notes that in Malaysia, "the lack of co-operation between the state and Chinese capital has compromised the nation's ability to enhance its technological capabilities and develop a strong manufacturing sector." Likewise, Coughlin comments that in Kenya, "Africans own very few medium or large-sized manufacturing firms. This has seriously impeded an identification of interests between local industrialists and the political circles. As a result, the government's economic policies and bureaucratic decisions are frequently detrimental to the nation's long-term industrialization."
The World Bank's study on the East Asian "miracle" gave some of the credit for East Asia's (including Thailand, Indonesia, and Malaysia) success to the relationship between entrepreneurs and the state. In particular, states were said to have engaged in productive discussions with their entrepreneurs, receiving and giving guidance on industrialization. While this does seem to characterize the northern tier of Asian countries, with Japan as the foremost example, this kind of consultation has been nascent at best in Southeast Asia. Yet the countries there have made some efforts to institute consultative mechanisms. Malaysia is probably the furthest along in this regard, and its major formal consultations only began in 1991. As of 1993, Indonesia had no formal government-business links for policy coordination, and although Thailand did establish such links, there is considerable debate over whether or not they have been effective.
States also have the option of direct intervention to promote entrepreneurship. Again, both regions have attempted to "indigenize" their productive base. The Southeast Asian countries seem to have been more serious about using government to provide a boost to indigenous entrepreneurs. For example, Indonesia promoted indigenous investment in oil sector support services by closing certain services to foreign investment and allowing only indigenous firms to bid. The government also promulgated "buy Indonesian" procurement regulations for all government agencies in 1980. In Malaysia, where the state was "relatively autonomous from the dominant foreign and Chinese business groups," its desire both to promote Malay interests and larger-scale projects led to joint ventures between state enterprises (with shares held in trust for Malays) and foreigners. While the government could have promoted subcontracting to build up the capacity of the small and medium-size entrepreneurs in Malaysia, most of these entrepreneurs were Chinese, and thus the state chose the option of creating "a new Malay business and managerial class." Indonesia did institute a program to support small and medium-size enterprises, but "largely because of weak institutional capabilities" these programs have not been very successful.
Recent work on industrial clusters, districts, and regions such as Baden Würtenberg in Germany, Sakaki Township in Japan, and Emilia Romagna in Italy point to the important influence of regional and municipal governments, in addition to, or instead of, national governments, in providing an enabling environment, establishing supportive institutions and public goods, and encouraging industrialization. There is, however, little evidence that regional and municipal governments have had this kind of nurturing role in either Southeast Asia, or Subsaharan Africa.
By: Deborah Bräutigam
Local Entrepreneurship in Southeast Asia and Subsaharan Africa: Networks and Linkages to the Global Economy
School of International Service
American University
Washington, DC
Entrepreneurs and the State - To learn more about this author, visit United Nations University's Website.
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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