ARTICLE - Developing Entrepreneurs

This issue from Bogger Economics Malaysia :

Developing Entrepreneurs: What’s Working, What’s Not

After watching the ongoing drama and tragedy in Japan this past week, it’s hard to focus on purely local concerns. It’s fairly obvious there’s been an enormous amount of damage to the country and the human toll is likely to be horrific. There’s also going to be a lot of repercussions around the region, not least with respect to disaster recovery and the future of nuclear energy.
But the Japanese are a resilient and industrious people, and I’m confident they’ll overcome this crisis, as they have many another in the past. Japan in the post-Meiji restoration era is a case in point: making the transformation from an isolationist, largely agrarian economy into a full-fledged industrial world power in under two generations is an incredible national achievement.
Which provides me a sideways segue into today’s topic – entrepreneurship. We’ve got a lot of programs here in Malaysia to help entrepreneurs, from financial to marketing to educational assistance. There’s no shortage of government programs or money being thrown at developing entrepreneurs – yet we’re hardly known as a hotbed of entrepreneurial activity. So the question is: what’s holding back entrepreneurial development in Malaysia?
And the answer is…well actually the first step is to measure the the many dimensions that make up a successful entrepreneur. Without an accurate view of what’s available against what’s needed, there’s no basis for remedial action.
That’s what a new entrepreneur development index, released last year and launched just two weeks ago, promises to give. The Global Entrepreneurship and Development Index (GEDI) combines other measures of entrepreneurship into a comprehensive overview of efforts in developing entrepreneurs (abstract):

The Global Entrepreneurship and Development Index (GEDI)
Zoltán J. Ács & László Szerb

Abstract: This paper constructs a Global Entrepreneurship and Development Index (GEDI) that captures the contextual feature of entrepreneurship across countries. We find the relationship between entrepreneurship and economic development to be mildly S-shaped not U-shaped or L- shaped. We find that the stages of development are more varied at the innovation driven stage than at either the factor driven stage or the efficiency driven stage. Implications for public policy suggest that institutions need to be strengthened before entrepreneurial resource can be fully deployed.

You can find a shorter version of the paper here.
The theoretical and empirical findings are interesting in and of themselves, but the practical pointers are just as valuable:

	Malaysia
Global Entrepreneurial and Development Index	0.364
GEDI Rank	31
Entrepreneurial Attitudes Index	0.485
ATTI Rank	20
Entrepreneurial Activity Index	0.447
ACTI Rank	26
Entrepreneurial Aspirations Index	0.160
ASPI Rank	51

Out of the 71 countries which are measured, we’re a little above the middle of the pack in aggregate terms. But looking at the breakdown of the Aspirations index, it’s really obvious where the weaknesses lie:

	Malaysia
Entrepreneurial Aspirations Index	0.160
New Products	0.165
New Tech	0.101
High Growth	0.075
Internationalisation	0.396
Risk Capital	0.109

Innovation, anyone?
One last point – looking at the individual components of the other indexes reveals a few more areas that could do with improvement:

• Startup Skills (0.294)
• Technology Sector (0.379)
• Quality of Human Resource (0.370)

None of the above come as great surprises, though the really poor numbers in the Aspirations index do give pause for thought. But it’s always nice to have some confirmation of the received wisdom, and better yet, a way to measure and monitor progress.
Technical Notes:
Zoltán J. Ács & László Szerb, “The Global Entrepreneurship and Development Index (GEDI)”, Conference Paper, June 2010 (warning: pdf link)