Entrepreneurship and Development

A commonly encountered notion is that entrepreneurship and innovative thinking pertain only to successful businessmen and are of little relevance to average citizens. But in reality entrepreneurship and innovation are universal traits rather than privileges of a narrow group. After all, entrepreneurship present in spot market transactions and street bazaars is a fabric of daily life in most developing countries. Yet, many of those countries cannot be described as prosperous. What is missing in that informal kind of entrepreneurship?

The answer lies in the importance of institutions that can channel the ubiquitous entrepreneurial spirit and drive to innovate toward the growth-enhancing ends. Those institutions include secure property rights, rule of law, fair competition, and so on. In a system that creates such conducive business environment, society can reap the benefits of entrepreneurship and innovation: better goods and services available to a greater portion of the population. In the absence of those institutions, applying one’s entrepreneurial qualities in the formal economy is not possible for many, leading to the emergence of the informal sector.

Youth entrepreneurship is of particular importance to development, given the energy and potential of young people to be the agents of change in their communities. Young people around the world should be educated about the value of entrepreneurship but also equipped with practical skills and knowledge to translate their ideas into reality.