What do entrepreneurs need in order to invest successfully in manufacturing? At a basic level, particularly if they are traders thinking about moving their capital into a fixed investment, they need a political and economic environment with a certain degree of stability and predictability and some incentives, or at least the absence of strong disincentives for investment. They also need good infrastructure: roads, ports, a constant supply of electricity and water, and reliable telecommunications. On an institutional level, they need contract enforcement and security of property. This can be supplied by the state, or by informal systems based on reputation or sanctions of exclusion. Finally, entrepreneurs are tasked with gathering the "inputs" to the production process: ideas and information about opportunities and markets, investment finance and working capital, sources for technology and inputs, and skilled personnel. In this section we consider the enabling conditions and constraints faced by local entrepreneurs in both regions. The section begins with a review of networks and clusters as institutions that strengthen entrepreneurs individually and collectively, continues with a discussion of relationships between entrepreneurs and the state, and concludes with a review of foreign investment links. We argue that different local groups have developed different histories of linkage to the global economy, to ideas and resources outside their locality, and to the state, and that this explains an important part of the ability of some groups to embark on dynamic industrialization.
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
To learn more about this author, visit United Nations University's Website.
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