Monday, October 15, 2012

Looking for a Google

Can the spirit of enterprise be taught?

WORLD-BEATING companies that began in garages—think of Amazon, Apple or Google—are revered in the West. Developing countries can boast one or two examples of their own: India’s Tata and South Korea’s Samsung began life as small trading companies; Thailand’s Charoen Pokphand Group, an agri-business firm, started as a seed shop. But these are exceptions. Of the millions of small enterprises in poor countries, hardly any grow big and strong. The World Bank’s new World Development Report* looks at what can be done to help start-ups in poor countries become the next Google
The question is what can be done to improve matters. Obviously, good infrastructure and a welcoming investment climate matter. Governments have tried providing cheap loans or grants to pay the wages of an extra employee. This had no effect. Nor did giving special grants to female business owners, as happened in Ghana. But free management training did help. The trouble is that most enterprises see no point in it: asked whether lack of management expertise was a problem, only 3% of Brazilian small firms said yes.
Learning from abroad, though, makes a big difference. In 1979 Desh, a Bangladeshi garments firm, sent 130 of its staff for an eight-month course at a South Korean textile plant. At the time, Bangladesh had no textile exports and no modern industry. When the trainees got back, almost all of them set up their own firms. Today Bangladesh has 3.6m textile workers, 80% of them women, generating $13 billion of exports a year. Mr Yunus should be proud.

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