Chapter 53: Third-world Entrepreneurship
* Peter Kilby With but one exception, economists have conceptualized the task of the entrepreneur in the Third World as being no different than that in advanced economies. The sole exception is Everett Hagen. In his 1962 volume On the Theory of Social Change: How Economic Growth Begins, Hagen conceptualized the entrepreneur as a creative problemsolver interested in things in the practical and technological realm. His starting point is not a fully developed market economy, but a traditional economy in the Third World setting. Deciding what to produce and how to do it, bearing risk, making judgments about men and things, being ever alert to price discrepancies, perceiving the possibility of a new combination and carrying it – such are the activities assigned to the entrepreneur, along with a supporting set of aptitudes, skills and psychological dispositions. With respect to the native populations of most developing countries, this conceptualization has not proved fruitful. Policies to promote entrepreneurship, in accord with the Knightian power to provide guarantees, have focused on the provision of finance. But experience has shown that the operational constraint has not been a shortage of risk capital, the problem has not been a shortage of entrepreneurial ventures. Rather the problem has been that, when established, these ventures fail to grow and fail to survive over the longer run. Clearly, whether in an underdeveloped country or in an advanced market economy, the activities of the businessperson will, inter alia, everywhere entail – to greater or lesser degree – perceiving and pursuing apparent opportunity,...
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