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Entrepreneurship

How start-ups can turbocharge global productivity growth

Ganesh Rasagam's picture



Attendees at Republica Berlin 2016, an annual conference on digital culture for entrepreneurs from around the world.
Photo Credit: © Victor Mulas/The World Bank


We have witnessed in recent years the emergence of technology start-up ecosystems across the world. New technology trends are reducing the costs as well as the barriers of access to markets and resources for developing technology start-ups. If in the 1990s an entrepreneur needed $2 million and months of work to develop a minimum viable prototype, today she would need less than $50,000 and six weeks of work.

Entrepreneurs are also surging in emerging economies. India hosts major start-up ecosystems in New Delhi and Bangalore, with their start-ups having raised $1.5 billion in funding in 2016, respectively. São Paulo ranks among the top 20 start-up ecosystems with more than 1,500 active start-ups, closely followed in the region by Santiago and Buenos Aires. Warsaw hosts around 700 active start-ups, and Nairobi is the home of leading African start-ups, such as Ushahidi, M-Pesa or Brck.

Tech start-up ecosystems present new opportunities for emerging economies. Local entrepreneurs develop new business solutions that address domestic demands. For instance, in Kenya, M-Kopa is addressing the demand for energy in off-grid locations, a major issue in the country's rural areas. Unicorns, those start-ups that raise more than $1 billion, are no longer a U.S./Europe-only phenomenon. Indian, Chinese and Indonesian start-ups, such as Lu.com, Flipkart or Go-Jek, have reached this valuation, and African Internet Group from Nigeria is poised to be the first African unicorn.

Start-up ecosystems also create new jobs. Data from New York City's ecosystem on employment generated in the tech start-up ecosystem shows that most of the jobs generated by tech start-ups are not in start-ups themselves, but in local traditional industries that either are influenced or disrupted by start-ups. Think about a bank or a retail company that has to react to a mobile app providing finance or retail business and that needs to hire new talent to develop a competing app. More than 40 percent of these new jobs do not require a college degree. These are jobs like building a website, a basic database, a web or mobile app.

How to achieve social transformation through innovation with Marcelo Cabrol

Enrique Rubio's picture

Marcelo Cabrol is close to turn 50, and has more curiosity than ever for ideas that can transform the world. I interviewed Marcelo about how to achieve transformation in order to solve the many compelling social issues that our world faces. He says that there are two fundamental elements: understanding the problems we are trying to solve and listening.

Marcelo tells the story about how the conversation about development has dramatically shifted over the past ten years. There are more participants involved in dialogue around poverty now, and that’s a huge opportunity to enrich the conversation. It is also why “everyone interested in development must become a student of the problems”, as Marcelo says, which means understanding the underlying causes of those problems. There’s no substitute for this when entrepreneurs are getting ready to sell their ideas for development.

Then, the ability to listen, together with an open mind, is essential to find a solution for the many ideas that are sprouting everywhere.

Marcelo uses one of his dearest fields, education, to explain how this powerful combination can transform an entire sector and adapt it to the new demands and needs of the 21st century.

Listen here:

How to Achieve Social Transformation Through Innovation with Marcelo Cabrol

How can countries take advantage of the fourth industrial revolution?

Victor Mulas's picture

The economy is in a restructuring process. Technology-led transformations are no longer limited to technology-related sectors and are beginning to affect structural sectors, including manufacturing, retailing, transportation and construction. Disruptions of business models are surging from a fragmented network of entrepreneurs and innovators. Cognitive skills are increasingly being replaced by technology-led productivity, affecting labor supply in both developing and developed countries. In turn, creativity and social skills are becoming more important and more valuable than ever before. This process has been called the Fourth Industrial Revolution.

Countries that are less prepared to adapt to these structural changes will suffer in their competitiveness. As much as 80 percent of the productivity gap between developed and emerging economies can be explained by the lag in transitioning to technology-led changes from previous economic restructuring processes (for example, the 18th-  and 20th-century industrial revolutions). Automation is reducing the cost of traditional labor-intense industries (reducing costs relative to labor by 40 percent to 50 percent since 1990), shifting the cost structures that benefited emerging economies. Trade is shifting increasingly to digital goods and services. Knowledge-intensive flows of trade are already growing about 30 percent faster than capital-  and labor-intensive trade flows. Jobs are also being affected, with routine cognitive functions being affected the most, while providers of intellectual and physical capital benefitting disproportionately. 



There are also opportunities stemming from this widespread diffusion of technology and transformational changes. Entrepreneurship and innovation is becoming affordable and de-localized. The innovation model of large capital-intense laboratories (e.g., Bell Labs) is not the most effective one anymore. Instead, open innovation (the process whereby large firms co-create innovation with entrepreneurs and other actors, instead of having an internal process) and innovation emerging from startups are increasing. Tech startup ecosystems have emerged in cities worldwide, in both emerging and developed economies, disrupting traditional business and creating new industries. This results in local innovation and business models that can be appropriated by the domestic economies. These ecosystems also generate new sources of jobs emerging from the structural changes produced by technology.

Real social innovation needs empathy and understanding- podcast with Richard Hull

Enrique Rubio's picture

In this podcast, Richard Hull says that real social innovation needs empathy and understanding of the people and context upon which we want to make a difference. Richard is the Director of the Master’s Program in Social Entrepreneurship at Goldsmiths in the University of London. One of the things that I found most interesting about his program is the motto of thinking of social entrepreneurship “outside of the box”, which Richard explains during the podcast.

He describes the strong connection that exists between creativity, which is the foundation of the program, and social entrepreneurship. Particularly, even though there’s a lot of innovation, creativity, and technology that is very visible, he says that there’s a lot of work going on quietly in the background, and it is important to understand its lessons, too.

Richard talks about the example of participatory market development approaches, where the design of innovation revolves around the poorest and most marginalized people. He mentions how some western technologies are dumped in developed markets, becoming totally inappropriate. Richard highlights that it is fundamental to create the innovations with the people who are going to end up using them, rather than imposing on them.

Weekly wire: The global forum

Roxanne Bauer's picture

World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

More people in less space: rapid urbanisation threatens global health
The Guardian

The global population looks set to rise to 9.7 billion people by 2050, when it is expected that more than two-thirds of humanity will be living in urban areas. The global health community is bracing itself. Compared to a more traditional rural existence, the shift in lifestyle and inevitable increase in exposure to pollution will lead to significant long-term rises in non-communicable diseases such as cancer and cardiovascular disease. Worrying as this prospect may be, current population trends are already altering the global health landscape even faster than we realise, and that could pose far bigger and more immediate problems. When population growth is combined with other pressures, such as climate change and human migration, some parts of the world are likely to experience unprecedented levels of urban density.

How Being Stateless Makes You Poor
Foreign Policy
For the first 24 years of his life, third-generation Palestinian refugee Waseem Khrtabeel rarely noticed any difference between himself and his Syrian neighbors. Like his parents, Khrtabeel was born and raised in Damascus. He speaks with a distinct Syrian accent, just like that of his many Syrian friends. But Khrtabeel is not like other Syrians. He’s stateless.The first time Khrtabeel, 30, grasped the magnitude of that word was in early 2010, after graduating from Damascus University with a mechanical engineering degree. Khrtabeel was elated when he secured an interview with the Saudi Binladin Group, one of Saudi Arabia’s most prominent construction companies. On an unseasonably warm day in January, he arrived at the company’s recruiting office in southwestern Damascus promptly at 2 p.m., energized and confident. He was shown the door less than seven minutes later.

The changing face of entrepreneurship

Ganesh Rasagam's picture


Members of the World Bank Group’s Innovation & Entrepreneurship team – along with two of the entrepreneurs supported by the team (with their affiliations in parentheses) – at the Global Entrepreneurship Summit. From left to right: Temitayo Oluremi Akinyemi, Loren Garcia Nadres, Natasha Kapil, Kenia Mattis (ListenMi Caribbean), Ganesh Rasagam, Charity Wanjiku (Strauss Energy), Komal Mohindra, Ellen Olafsen.


What do you picture when you hear of new technologies and hot startups? Perhaps a trendy office space overlooking the Golden Gate Bridge and tech moguls from San Francisco? Well, think again.

At the recent Global Entrepreneurship Summit (GES) in Silicon Valley — an annual event hosted by President Barack Obama and attended by nearly 700 entrepreneurs — one message came across clearly: Great ideas come from anywhere. And, increasingly, they’re coming from talented entrepreneurs who are overcoming the odds in cities like Nairobi, Kenya or Kingston, Jamaica.

Increasing internet and mobile-phone access is bringing new opportunities to young entrepreneurs from developing countries. More than 40 percent of the world’s population now has access to the internet and, among the poorest 20 percent of households, nearly 7 out of 10 have a mobile phone.

Businesses that can take advantage of the widespread use of digital technologies are growing at double-digit rates — in Silicon Valley, as well as in emerging markets. Ground-breaking technologies and business ideas are flourishing across the world, and a new, more global generation of tech entrepreneurs is on the rise.
 
The potential impact — economic and social — is significant. Entrepreneurs have a powerful ability to create jobs, drive innovation and solve challenges, particularly in developing economies, where technology can address old inefficiencies in key sectors like energy, transport and education.
 
“[I]n our era, everybody here understands that new ideas can evolve anywhere, at any time. And they can have an impact anywhere,” said John Kerry, the U.S. Secretary of State. “In my travels as Secretary, I have been absolutely amazed by the groundbreaking designs I’ve seen, by the ideas being brought to life everywhere — sometimes where you least expect it.  By the men and women striking out to create new firms with an idea of both turning a profit as well as improving their communities.”
 
But for many of the brightest minds in developing countries, entrepreneurship is not an easy path.

As President Obama said during the Summit: “It turns out that starting your own business is not easy. You have to have access to capital. You have to meet the right people. You have to have mentors who can guide you as you get your idea off the ground. And that can be especially difficult for women and young people and minorities, and others who haven’t always had access to the same networks and opportunities.”


President Barack Obama on stage at the Global Entrepreneurship Summit with Mark Zuckerberg and entrepreneurs.
 

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.
 

One Internet
Global Commission on Internet Governance

Internet governance is one of the most pressing global public policy issues of our time. Some estimates put the economic contribution  of the Internet as high as $4.2 trillion* in 2016.1 The Internet of Things (IoT) could result in upwards of $11.1 trillion in economic growth and efficiency gains by 2025.2 And, the Internet is more than simply a system of wealth generation; it also acts as a platform for innovation, free expression, culture and access to ideas. Yet across multiple levels, the Internet’s basic functionality and the rights of users are under strain.

The Lopsided Geography of Wikipedia
The Atlantic

Think about how often, in the course of a week, you visit Wikipedia. Maybe you’re searching for basic information about a topic, or getting sucked into a wiki-hole where you meant to study up on the “Brexit” but somehow find yourself, several related pages later, reading about the carbonic maceration process for making wine (to take just one example that has totally never happened to me).  Now imagine you can’t access Wikipedia. Or you can, but not in your native language. Or there are plenty of entries in your language, but few on the subjects that are part of your daily life. Or those entries exist, but they’re not written by locals like yourself. You certainly have other ways of getting information. But Wikipedia is one of the most ambitious information clearinghouses in human history. How would these challenges shape your understanding of the world? And how would that understanding differ from the worldview of those who don’t face such challenges?

Undeterred, Success Habits of Women in Emerging Economies with Rania Anderson

Enrique Rubio's picture

Rania Anderson talks about her book Undeterred, The Six Success Habits of Women in Emerging Economies. Rania walks us through the habits. 

  1. to be undeterred, not to give up in the face of obstacles;
  2. to prepare yourself with your confidence and courage, and externally through the skills;
  3. to be focus, having goals and plans;
  4. work and life integration;
  5. accelerate, taking the actions that propel you forward and advance and
  6. lead, from wherever you are and whatever you do.

For the book, Rania interviewed ordinary woman who in normal environments and circumstances are being successful. She purposefully wanted to showcase women from emerging economies who have overcome the challenges around them to build successful ideas. Rania wanted to share her findings and the ideas that apply for women in developing countries.

Undeterred

African women help their communities go solar

Carolyn Lucey's picture

Also available in: Arabic | Spanish

Wamayo’s solar lantern has helped her tailoring business grow.



This number cannot be emphasized enough – more than 1 billion people around the world live without access to electricity, and 2.9 billion still cook with polluting, harmful fuel like firewood and dung.

As we celebrate Earth Day, we're looking at the ways to bring energy access to those communities and transform lives, and at the same time, protect our planet’s resources. How can we make sure that the right progress for communities is the right progress for the planet? 

The good news is that the world is constantly coming up with new technology to address this challenge. We have portable, phone-charging solar lamps and energy efficient cookstoves that are affordable and practical for communities living off-the-grid. The challenge now is how to make sure the right technologies are available in affordable and sustainable ways to the communities that need them most.

Solar Sister is a social enterprise that recruits, trains, and supports African women launch clean-energy businesses in their communities, selling lights and cookstoves to their neighbors. We are organized around the principle that women must be intentionally included in discussions around energy.

Celebrating women entrepreneurs on International Women's Day

Cecile Fruman's picture
WomenX – Taking It To Scale – Women At The Helm


It takes a special type of woman to be an entrepreneur.

I didn’t quite know what to expect when, earlier this year, I met with a group of women entrepreneurs in Karachi who are participating in the World Bank Group’s womenX program. I had read a lot about the low numbers of women running businesses in Pakistan, the challenging environment they operate in, and their many constraints. But I was struck by the positivity and drive of the women I met. They shared with me how they are improving their business and financial practices, building their confidence, and expanding their networks.

Take for instance, Mussarat Ishaq, who runs Al-Karam Packages. Mussarat was a Karachi-based housewife, pregnant with her third child, when her husband divorced her. With no work experience, little education, no money and no plan, she learned the ropes of polythene production and with a business partner, started out small – purchasing the raw material from local markets, using outdated machinery to produce plastic bags, and supplying them to small businesses in their area. Today, they have purchased more sophisticated equipment and they employ 250 employees, working to provide low-cost, high-quality, reusable and environment-friendly packaging materials to Pakistani clients.


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