Why are entrepreneurship and innovation so limited in the Caribbean?
Examination of key findings from a World Bank report that discusses entrepreneurship and innovation in Latin America and the Caribbean.
Over the past three or so years, there has been a growing focus on entrepreneurship and innovation in the Caribbean. Across the region, many initiatives have been executed that aim to nurture those two areas, especially in the ICT/tech space, such as, conferences, meet-ups, hackathons and app competitions, and most recently, the Startup Weekend experience.
However, a recent World Bank report that explored entrepreneurship in Latin America and the Caribbean, was of the view that although start-up and small businesses are plentiful in those regions, there are some endemic problems that hamper innovation, along with the growth and expansion of local businesses. This post highlights the critical elements needed to improve entrepreneurship and innovation in the Caribbean and with wider Latin American region.
Fostering greater entrepreneurship and innovation
It is report, Latin American Entrepreneurs, which was released by the World Bank earlier this month, the authors identified the following four key factors that underpin an enabling environment for innovation and entrepreneurship:
- Human capital. With regard to human capital, the focus would be on, among other things, improving the quality of education beyond better examination passes. It would extent to matters such as placing greater emphasis on tuition in the Science, Technology, Engineering and Mathematics disciplines, and supporting careers in those fields.
- Logistics and infrastructure. The authors of the report were of the view that countries would gain a competitive edge if there is a focus on logistics and infrastructure, for example in modernizing ports, transport, and Customs. Improving logistics and infrastructure could also have the benefit of encouraging efficiency and promoting innovation.
Another likely spill-off of addressing logistics in particular, could be improvements in matters related to ease of doing business. Most Caribbean and Latin American countries performed poorly on the latest World Bank Doing Business report that was released two months ago. Hence whatever associated benefits that could eventuate from addressing existing logistical and infrastructural deficiencies, could go along way to fostering entrepreneurship and innovation.
- The contractual environment. One of the main focal points of this factor was intellectual property and the systems needed to protect ideas, which the authors believed are critical to support innovation. However, in a wider context, matters related to legal and regulatory issues that can adversely affect business and creativity, especially when systems are unduly onerous, unclear, or foster uncertainty.
- Competition. Although other writers have explored both sides regarding the impact of competition on innovation, the authors are of the view that protectionist regimes, which shelter industries from competition, undermine innovation, productivity growth, and even the export of goods and services.
In the Caribbean, the impact of competition on innovation has been evident in the telecoms sector, where telecoms companies have had to introduce efficiencies and even revise their entire business model to consider the new and changing paradigms in which they operate. Additionally they have had to be creative and proactive across most aspects of their business in order to remain relevant and at the very least, maintain market share.
Finally, the authors also noted that entrepreneurs and prospective business owners in Latin America and the Caribbean are highly risk-averse, due for the most part, to the stigma still associated with failure in those societies. Hence businesses in those regions tend to be smaller than in other countries around the world, and do not scale as quickly, especially in terms of size of operations, reach and impact.
Image credit: David Castillo Dominici (FreeDigitalPhotos.net)