Saturday, 21 March 2009

A Search for Entrepreneurship that Creates the Needed Change


I have the good fortune of attending again another United Nations conference; this time around in the historic city of Londonderry in Northern Ireland, where one of the most recent ‘successful’ peace-making processes in the modern day world is reported to occur. The conference is sponsored by the United Nations University World Institute for Development Economics Research and focused on two distinct themes invariably linked into a progression – conflict and entrepreneurship.

Around 25 individuals were invited for the conference. The batch was composed of economists, psychologists, political scientists, anthropologists, sociologists, among others. Statistically speaking, roughly 40% are young professionals like me while the rest are experts in their different fields. Interestingly, I am one of the 3 people who has not finished or started his Phd yet.

Yesterday’s (20 March 2009) keynote speech was delivered by Professor Zoltan Acs of George Mason University. Zoltan Acs was one of the pioneer thinkers in entrepreneurship and was the most reluctant in the group to think that there is ever a plausible relationship between entrepreneurship and conflict. It is very easy to know why he would say so.

Acs is very certain of his definition of entrepreneurship. Entrepreneurship, for him, is a process where a society allows the best and the brightest to change society through an innovation. He alluded to the Bill Gates type of entrepreneur who has the capacity to transform society in a tremendous way and argued that such a person would not probably exist in a conflict society where the incentive structure and the institutions are not fertile enough to allow these types of creation and innovation to sprout.

I contextualize Acs’ definition in Bohol and ask myself, if there is ever any entrepreneur that would qualify to Acs’ definition? There are several people whom the local papers (the Bohol Chronicle, Sunday Post, etc) describe as entrepreneurs, most of them of Chinese descent, while others are non-locals (e.g. coming from somewhere else and doing business in Bohol). It is not that I have something against the Chinese or the domestic (or foreign) migrants that come to the island, but my question is, do they have the incentive to change the way we live?

At least 40% of the people in Bohol are below the poverty line, if you compute it using the dollar a day criteria or when you use a multiple cluster indicator to measure levels of deprivation. You have a primarily agricultural economy that relied on domestic consumption for growth. You have a thriving tourism industry that provides the needed cash for both local businessmen and the employed. But do entrepreneurs exist here?

Subscribing strictly to Acs definition, it seems that we do not have entrepreneurs in Bohol. First, we have businessmen but they do not engage in tradeable goods. Acs argued that services (hotels, etc) and trading businesses (your supermarkets) do not create tradeable goods that are necessary to have a pervasive multiplier effect on your economy. Trading and service establishments do not create the needed backward and forward linkages (e.g. demand and supply chains) that would make an economy vibrant and hardly maximise the use of factor endowments and factor inputs for greater efficiency gains. Simply put, the businesses we have in Bohol do not create jobs beyond the numbers that it directly employed. They do not create the demand for raw materials, nor do they use our excess educated labour force. They make use of products produced elsewhere and do not stir local production. A cellphone retail chain, for example, like Save and Earn does employ people but it does not in any way create any demand for raw materials, nor do they create alternative distribution channels where others can participate.

Second, businessmen in Bohol do not innovate, in the classic sense of the word. To innovate is to create something out of nothing, by making use of available raw materials and knowledge in the process of creation. They innovate on the ways they sell their merchandise and services, but they do not actually create anything. By “thing” here, we again mean the tradeable goods, one that can be passed on from a production chain participant or a consumer to another.

Third, businessmen in the province do not revolutionize the way the majority of the people live. Yes, we have businessmen getting their merchandise from local farmers, but the farmers are experiencing depressed prices. Yes, we have businesses employing people, but do they pay them well? I happen to talk to several supermarket employees and they receive only half of the legally-mandated daily minimum pay. It is sad to note that most, if not majority of the businessmen we have around are only concerned about their own net benefit, and not everybody else’s. Even our politicians are such, even though they are not businessmen.

Today is a historic day for me, as I sound of this call from Londonderry, to search for at least one entrepreneur in Bohol, one that would qualify strictly to Acs’ definition. This would seem like a desperate call. If you happen to know one, please tell me. Your news will be a great light for me because today, the weather forecast says we will not get to have some sun in Derry.

8 comments:

Anonymous said...

hello. nice article. i can become one if budget permits. hehehe. i will try to learn and become an entreprenuer.

Anonymous said...

Your post was very educational. I've always wondered why the so-called "development" in Bohol, that the politicians never fail to mention during speeches, has not been very evident among people in the barangays. Yes their are new investors and tourist arrivals is still on the rise, but if you go to places like Ubay or Dagohoy,etc. people are still deprived and heart-achingly poor. Now I know that the possible reason is the lack of entrepreneurs who invest in "creating" a demand for a product that is uniquely Boholano, using Boholano raw materials and employing Boholanos. I am not talking about peanut kisses or other "kakanin" either, which frustratingly does not create a huge demand save for tourists who buy them.

I hope politicians read this article and somehow see the need to entice investors who will invest not just in building malls or resorts, but also invest in a business that generates livelihood for our fellow Boholanos.

Romeo Coquilla, Doha Bank, Qatar said...

It's great and I'm so proud of you for being one of the yuppies who were invited to attend that event.

By the way, talking about entrepreneurship in Bohol, one good example is the basket and native handicraft industry in my hometown of Antequera. Antequera is the pioneer in this kind of industry which until this generation remains the main source of living by most of the town's inhabitants of 21 barangays. It is being recognized that the creativity and innovation of these people really changed the society because these products are tradeable and are being exported to the global market like in USA and Europe. Through these creation and innovation that the people have the purchasing power to satisfy their needs.

Yes, you are right that only those business financers are becoming wealthy by taking advantage as nobody from the government regulates the prices and leaving our poor makers/weavers of no choice to sell their products at a lower prices.

We have abundant resources to become entrepreneur and in my own view, I believe that there is already an existence of ENTREPRENEURSHIP in Bohol but because of the continued malpractices, traditional business profiteering, graft and corruptions, no support from our government bodies, the real ENTREPRENEURSHIP remains hallucination to the Bohol's progress.

I hope to read more from your writings. God Bless you and your family.

Once again, thank you and regards.

condring said...

thanks for the article. tinuod jud na imo ingon nga wa juy mo-qualify dinhi sa ato nga entrepreneur kon ang definition ni Acs ang basehan!

ang mga negosyante dinhi sa ato kay di man gud healthy ang competition unya gawas pa, very confined ang ila services.

unya, nindot jud unta to no nga base sa kang Acs nga ugmaron ba ang raw materials para daghan ang ma-involve! Ambot oi, kanus-a kaha na mahitabo dinhi sa ato!

leo said...

hey miko,

while i cannot speak with the expertise of bohol i can observe the mere fact that Bill Gates is an exceptional case, as talented as he is, he only was able to use his technical service by networking with key people within a budding software industry through the school he dropped out of, Harvard. How many people have the resources to attend such an institution? Lets also not kid ourselves, over 80% of business ventures in the US fail in their first year.

One thing I believe that sets out great entrepreneurs apart is the ability to identify local/regional market trends, understand where demand is heading and have the savvy to line up a sustainable strategy.

I agree a service economy can only go so far as I notice poorer cities in the US tend to have overcrowded retail and over-rely on tourism.

It will only be up to the people of Bohol to understand their own assets and to define their place in the global market. It is in the politics of the market which will always be in conflict according to each entrepreneurs/country's agenda.

You hit the key question, "do (outside entrepreneurs) have the incentive to change the way we (Boholanons) live?"

Are we expecting them to ever have that incentive? Let alone with a social entrepreneurial spirit?

Sad to say, I don't think usual practice in industry is to raise the standard of living in the communities they invest in. If anything, it gentrifies it. It always takes a concerted effort to have the local workforce be hired and paid fairly.

Miko Cañares said...

i think leo hinted at a very important point which was also mentioned elsewhere by a lady from dauis in this blog. is there ever a "capitalism with a heart"? my position, as i have indicated once, is that there can never be, unless one means other things that what 'business' or 'capitalism' for that matter, stands for.

in recent conceptualizations of entrepreneurship, there is a mention of the word 'social entrepreneurship'. i am not very clear if it means an entrepreneurship that yields social benefits or if it is one which in its entirety seeks to achieve purely social gains. it does not matter if the concept stands though, what matters if such can exist in a real world of real people.

i always have a discomfort with projects that have fancy names as "capacity building", "entrepreneurial farming", and the like, that development agents use in the province these days. sometimes, in these types of projects, it is the desire of the project holder more which matters and not really the ones that they say they seek to serve.

Anonymous said...

Idiots types faster than they think Can you please, live in the earth and be true to it's meaning..live in Bohol and then speak... The entrepreneur you're looking for is www.auza.net ..... This is not even mine, but I know the guy. I'm a software engineer myself..and plan hope someday I will work/settle in Bohol. Here is my email address: u2pian@yahoo.com.

"be true to the meaning of the earth" -- Friedrich Nietzsche

Miko Cañares said...

To the person who wrote the most recent comment:

I live in Bohol, ...if your comment is targeted at me. I think your argument is entirely misplaced, or I might be too dumb to understand your drift.

Read the post again, and do not jump to hasty and angry conclusions. Or better still, tell us your name so that we can have due credits to a voice that thinks people in boholanalysis are "idiots who type faster than they think".