Like it? PLEASE +1 it! Thanks! Evan Signature
Evan Carmichael Top Header about About

Local Entrepreneurship in Southeast Asia and Subsaharan Africa: Networks and Linkages to the Global Economy

I. Introduction
For much of the past decade, the world has applauded the striking development performance of Indonesia, Malaysia and Thailand. Despite the setbacks caused by the present financial crisis in Asia, the rapid structural transformation and improvement in the standard of living in these three countries remains a powerful testament to the benefits of a strategy emphasizing industrial exports. African countries have tended to remain commodity exporters, and while Africa has remained largely untouched by the "Asian flu", the continent also missed out on the benefits of engagement with the global market.

Why has Southeast Asia developed such a dynamic industrial export sector, while Subsaharan Africa has not? Until the recent financial crisis, most analyses argued that Southeast Asia had "developmental states", while Subsaharan Africa largely did not. These developmental states were credited for putting in place the fundamentals of macroeconomic stability and investment in education, and orienting policy to favor exports, or at least to create a level playing field between exports and imports. They were said to have engaged their private sectors in high-level "deliberative councils", designing and implementing policies that encouraged productivity and efficiency. However, the financial crisis put this interpretation into question. In the aftermath of the crisis, the Southeast Asian states are now being castigated for their high levels of patronage, corruption, and business-state collusion.

It remains a little too soon to put nails in the coffin of the Southeast Asian developmental state. However, the Asian miracle always had a societal side, one that a state-centric focus largely missed. Many who wish to compare Southeast Asia and Subsaharan Africa point to the structural similarities between the two regions: similar commodity export histories, similar GNP/per capita in the 1960s, etc. Yet the differences between the two regions are significant, and particularly so in their experience of entrepreneurial development. This paper suggests that Southeast Asia's lead over Subsaharan Africa is not simply a response to good policies undertaken in the past two decades, but rather also reflects the different ways in which each area first engaged with the capitalist world, the paths indigenous and non-indigenous entrepreneurs were allowed to take and the experiences they were allowed to accumulate during the colonial period and after, and the subsequent depth and breadth of the business networks and global linkages that characterize the entrepreneurs of each region.

When seen historically, several striking differences emerge between Subsaharan Africa and Southeast Asia. First, Southeast Asia was well integrated into Asian and European maritime trading networks several centuries before maritime trade reached most of Subsaharan Africa. The lower cost and greater ease of maritime trade meant that traders in Southeast Asia could develop business skills, be exposed to outside innovations, and accumulate significant capital much earlier than was possible for many in Africa. As part of this maritime mobility, waves of Chinese immigrants settled in Southeast Asia and were to become significant elements in the area's economic development. Second, significant import-substitution industrialization began in Southeast Asia in the late 19th century, three or more decades before any significant modern industrial development occurred in Africa, giving Asian entrepreneurs and workers a longer history of experience with industrialization. Third, proximity to Japan served as a powerful catalyst for entrepreneurial development in Southeast Asia. Japanese firms appear to be much more likely to enter into joint ventures in manufacturing with domestic firms, and at a lower level of technology than western firms. African entrepreneurs had no similar, "appropriate" catalyst. Direct foreign investments in Africa are still much more likely to be in mining, petroleum, and other primary commodity extraction ventures.

This paper reviews the state of the knowledge about local entrepreneurship in Southeast Asia and Subsaharan Africa. It continues with a brief discussion of entrepreneurship and several related issues and questions. It then provides a short social history of entrepreneurial development in both regions. The fourth section reviews the enabling conditions and constraints facing local entrepreneurs in both regions, with examples from Thailand, Indonesia, Malaysia, Nigeria, Mauritius, and Kenya. The conclusion suggests some generalizable propositions, hypotheses, and areas for further research.

Deborah Bräutigam
School of International Service
American University
Washington, DC

Related Articles

  Foreign Joint Ventures in Southeast Asia and the Role of Japan
  Entrepreneurs and the State
  Entrepreneurship and the Global Economy
  Capitalism and Entrepreneurship in Southeast Asia and Subsaharan Africa in Comparative Historical Perspective, 600 A.D. to 1970 or so
  Networks and Global Linkages
  Comparison with other developing countries: Africa’s human development
  Introduction: Human Capital and Economic Development
  18.0 Conclusion: Entrepreneurs and entrepreneurship in Africa
  The role of human and physical capital in growth: The Effects of Human Capital on Economic Development
  1.7 Conclusion: Economic Report on Africa 2007
  SMEs and entrepreneurs in Africa
  4.0 Diversification trends in Africa: Economic Report on Africa 2007
  13.0 The Entrepreneurial Firm The External Environment: Entrepreneurs and entrepreneurship in Africa
  1.0 What is known and what needs to be done: Entrepreneurs and entrepreneurship in Africa
  SME's - an African challenge
  References: Enhancing Africa’s Trade: From Marginalization to an Export-Led Approach to Development
  III. BACKGROUND - Microfinance in Africa

Home > African-Accounts > United Nations University > Local Entrepreneurship in Southeast Asia and Subsaharan Africa Networks and Linkages to the Global Economy >

Free PDF Download
By United Nations University

About the Author: United Nations University

RSS for United Nations's articles - Visit United Nations's website
UNU is dedicated to the generation and transfer of knowledge, and the strengthening of individual and institutional capacities in furtherance of the purposes and principles of the Charter of the United Nations. The mission of UNU is to contribute, through research and capacity building, to efforts to resolve the pressing global problems that are a concern of the United Nations, its Peoples and Member States. In fulfilling this mission, UNU fosters intellectual cooperation among scholars, scientists, and practitioners worldwide — especially those in the developing world — and functions as: an international community of scholars; a bridge between the United Nations and the international academic community; a think-tank for the United Nations system; a builder of capacity, particularly in developing countries; and a platform for dialogue and new and creative ideas.
Click here to visit United Nations's website.
Dashed Line

More from United Nations University
Foreign Joint Ventures in Southeast Asia and the Role of Japan
Capitalism and Entrepreneurship in Southeast Asia and Subsaharan Africa in Comparative Historical Perspective 600 AD to 1970 or so

Related Forum Posts

Re: Local Advertising for your online business Re: Local Advertising for your online business
Re: need advice Re: need advice
My Favorite Entrepreneur – created by Armand Rousso My Favorite Entrepreneur – created by Armand Rousso
Re: e-Commerce and e-Payment providers Re: e-Commerce and e-Payment providers
Re: Newbie from Africa Re: Newbie from Africa

Share this article. Fund someone's dream.

Share this post and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Share for a Cause

By: Evan Carmichael

Like this page? PLEASE +1 it! Evan Signature


Subscriber Counter
  Supporters: Thank you Sharon Galor of Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs! 
Connect with Evan google plus facebook Twitter YouTube Contact