ECON158 Growing an Entrepreneurial Economy

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ECON158Growing an Entrepreneurial Economy

• Anthony T. Easton
• SJSU Spring 2006
• aeaston_at_email.sjsu.edu

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Growing an Entrepreneurial EconomyKey
Characteristics

• -- A Market-Oriented Environment
• Private Property Rights
• Legal System (contract protection)
• Government Administration
• Infrastructure
• -- Business Training
• -- Finance Credit Assistance

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Entrepreneurial versus Managed Economy Models

• Different Groups of Characteristics (14
  dimensions)
• - I. Underlying Forces
• - II. External Environment Characteristics
• - III. Internal (or firm) Characteristics
• - IV. Policy Considerations

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Entrepreneurial versus Managed Economy Models

• I. Underlying Forces
• Localization versus globalization
• Change versus continuity
• Jobs high wages versus jobs OR high wages

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Entrepreneurial versus Managed Economy Models

• IIa. External Environment - Managed Economy -
  Links Between
• Stability
• Specialization
• Homogeneity
• Scale
• Certainty
• Predictability
• Versus Economic Growth

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Entrepreneurial versus Managed Economy Models

• IIb. Entrepreneurial - Focuses on Links Between
• Flexibility
• Turbulence
• Diversity
• Novelty
• Innovation
• Versus Economic Growth

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Entrepreneurial versus Managed Economy Models

• III. Firm Behavior (How Firms Function)
• Control versus Motivation
• Firm transaction versus Market Exchange
• Competition Cooperation as Substitutes versus
  Complements
• Scale versus Flexibility

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Entrepreneurial versus Managed Economy Models

• IV. Government Policy
• Goals Enabling versus Constraining
• Target Inputs versus Outputs
• Locus Local versus National
• Financing Entrepreneurial versus Incumbent
• (source Max Planck Institute David Audretsch)

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Key Ingredients for an Entrepreneurial Economy

• Availability of Risk Capital
• Pro-Enterprise Mindset
• Willingness to Try Out New Products, etc.
• Open and Meritocratic Climate
• Rewards Risk Handsomely and Punishes Risk Lightly

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Tips and Techniques of Privatization

• Contracting Out
• Managing Contracts
• Public-Private Competition
• Franchise
• Internal Markets
• Vouchers
• Commercialization
• Self-Help
• Volunteers
• Corporatization
• Asset Sale or Long-Term Lease
• Private Infrastructure Development Operation