Entrepreneurship is an interesting phenomenon that has revolutionized many economies and become a mainstream policy objective for most countries. Research indicates that Small Medium Enterprises (SMEs) tend to constitute 95-99% of the business activity in any economy. In fact, over the last decade or so, entrepreneurship has been termed as the engine for progress and an important facet of sustainable development.
Evidence suggests that entrepreneurship leads to innovation, constructive competition and job generation. However, impact of entrepreneurship tends to differ between countries at the same level of development or between countries at different stages of development because a portfolio of conditions and factors is necessary for entrepreneurship to flourish in a country. These include an enabling environment, adequate access to finance, robust and conducive policy and legal infrastructure. More specifically a culture that supports entrepreneurs is crucial as the latter doesn’t change overnight but has to be catalyzed through change in attitudes and perceptions. Risk tolerance and acceptance to positive change and innovation are key dimensions of the entrepreneurial culture.
Latin American countries have made great strides in terms of democracy, market and legal infrastructural changes, and macroeconomic stability. Also, the economic performance of the region and ability to survive financial crises of 2008 with minimal damage has built Latin America’s credibility as the land of opportunity. However there are areas such as education, knowledge creation and technology that require consolidated focus and effort by the governments of respective countries. The objective should be to stimulate entrepreneurship and consequently transition as a region into the knowledge based and innovation driven stage.
A few areas of reform, significant for entrepreneurship growth and global competitiveness, depicted in research include regulatory regime, access to finance, availability of venture capital resources and education system.
A recent paper published by Stanford University presented a broad roadmap outlining critical areas that the Latin American region needs to address to create an enabling environment. One policy area highlighted was improvement of the public education system and restructuring of the curriculum that centers on math, science and engineering to spur innovation and technical advancement. Secondly, the system should aim to instill risk taking behavior and build student capacity to tackle problems through an entrepreneurial frame of mind. Thirdly, government should recognize and promote the significant contribution of women entrepreneurship. Lastly, emphasis should be on synchronizing academic research and industry needs along with creation of linkages between industry and educational institutes such that the skill set taught in universities fits the market demand.
Efforts (government and non-government) of few Latin American countries in the process of becoming entrepreneurial hubs need to be mentioned: such as Chilean government funded seed capital programs known as Startup Chile along with the country’s simplification of setting up and doing business logistics. The latter initiative is banking upon Silicon Valley’s weak spot i.e. complicated immigration laws and facilitating the attraction of foreign investors and innovators along with spurring home grown entrepreneurs.
Another success story is the Palermo Valley in Buenos Aires; where entrepreneurs-to-be gather to brainstorm on a regular basis. Then, there is Panama which is being viewed as the Singapore of Latin America as multinational companies like Hewlett-Packard and Caterpillar are establishing world- class service hubs in the country.
It follows that governments need to take steps to attract investment from Latin American Diasporas, support formation of potential entrepreneur groups by creating an enabling environment, and focus on respective competitive advantages. Governments should encourage startups through adequate incentives that exploit areas of opportunities and advantage for example, Panama is benefitting from its’ strategic advantage of geographic location.
Moreover, stress should be on promoting youth’s role in value creation and social impact through entrepreneurship. Universities should not only promote forward thinking in theory but encourage students to get their hands dirty through in house business incubators and innovation/entrepreneurship units funded by patrons and industry leaders. As, in this day and age, the dimensions of success have changed and becoming a successful entrepreneur is now regarded as the pinnacle of accomplishment.