Why Are Some Societies More Entrepreneurial than Others?
papers.ssrn.com
papers.ssrn.com
They use this argument to counter "Guns, Germs, and Steel" [2] to explain dramatic economic differences across country borders in similar environments.
[1] https://www.goodreads.com/book/show/12158480-why-nations-fai...
[2] https://www.goodreads.com/book/show/1842.Guns_Germs_and_Stee...
Anecdotally I'm an Israeli who moved to Europe (first Austria then Germany) and at least from my layman's perspective both of these countries seem both a lot less entrepreneurial than Israel and a lot less corrupt...
So I wonder if something unusual is going on or if one or more of my perceptions are wrong.
It's probably due to the fact Germany focuses a lot more on industry technology rather than consumer-facing tech.
Driving through similar places in France the difference was striking. There didn't seem to be any of this decentralized economy. Again, I don't mean to draw conclusions, just stating my very limited observation.
Actually a not insignificant part of these backwater businesses are so called Hidden Champions[1]. Basically, small companies who are still leader in the world market for their very specialised product.
Do they do engineering or manufacturing?
And how could they maintain an advantage over so many others and of course over large companies ? Where's the r&d budget coming from ? And what about marketing ?
The companies themselves are usually under 50M Euro and have under 500 employees, and export-oriented. They've been a big target for Chinese acquisition, usually for companies that don't have any family to inherit the enterprise.
And this is basically a function of Germany's economic development. Germany industrialised quickly by extracting from consumers. Forced savings, cheap loans to entrepreneurs, etc. The model isn't optimised for competition and new entry.
Germany hasn't really moved on from that point. Industry and banking is still heavily concentrated (the level of corporatism is far beyond anything outside of East Asia). Capital markets still don't really exist (amazingly, given current ECB policy). Consumers are still paying a massive surplus over to the corporate sector (through low wages and forced saving).
Rocket Internet is the kind of exception that proves the rule. They were successful but only by doing something totally inexplicable in any other context (i.e. their shareholding model is a function of the awful state of finance in Germany).
Definitely, the govt have trying very hard on this for a while. But with no real results because the model seems to produce what voters want. There are signs that things are coming apart (particularly in banking) but before that point, nothing will change. It just makes no sense to compare Germany to an entrepreneurial society, that has never been the goal.
Perhaps in Europe, people are less inclined to borrow large sums of money?
Bankruptcy protection for individuals is not available everywhere and it often comes with very onerous conditions.
I would like to say that it is not necessarily true either. I do not have to go far, I could just take a look at my mother. Funny thing is that it was not even her who asked for a loan, it was my father, but they were married. They divorced, and fought the "bank" for years to no end. My mother is still the one who is suffering from the actions of my father. She will, to her last day. It makes me sad, her pension probably will be negligible.
Regardless, my mother would not get by at all on her own. :/ She works hard physical labor which affected her health A LOT. She is working hard just so a huge percentage of her salary can be taken away for something she did not do.
What is unusual is that Israel is the recipient of largess of the American tax payers and enjoys continual replenishment of available Capital. Enjoy it while it lasts.
There are 27/28 economies in the EU alone, ranging from Sweden to Greece, with very different cultures, laws and bureaucratic competencies, some of whom have successfully incubated very innovative businesses.
Perhaps innovative business (which I translate to “how to enrich myself via an ephemeral finance system without adding much new utility” these days”) isn’t a great target for governments to enable.
Social pressure downward to abide the desires of a minority of elites before the public used to be called authoritarianism, and it used to be reviled. Just because it lacks the overt violence of yesterday doesn’t mean it isn’t manipulative and damaging to society.
Profits are up. So is inequality.
On the other hand, entrepreneurs are usually independent people who really value freedom and don't like to work for others. Regardless if they can find a good job or not. So I'm not sure if my first theory holds. Maybe Israelis are just more independent then the average European (which can be explained by the culture and environment too).
But beside that, there's a simple explanation: it's quite hard to earn a decent salary in Israel, without being either an Entrepreneur , or by working in a startup company.
Germany(and maybe Austria) probably don't suffer from that problem.
South Korea in 1960 was poorer than Congo, Ivory Coast, Senegal, etc. About the same as Bangladesh. Today South Korea is as rich as France.
I'm not saying that South Korea and Japan didn't make good use of this intervention, but while the intervention in those countries was more akin to a financing/investment, which was in line with US' Marshall Plan during the Cold War.
In other countries such as those from Africa/South America, it was direct exploration of people and resources without really giving something back.
In both countries it's very easy to build/run unofficial businesses. But running a legal business is very different. In Thailand, I needed to hire a full time bookkeeper plus 3 weeks/year of an accountant just to run a 5 person business, and still needed to suffer through 2 weeks/year of government audits. In the USA, I can do everything myself (about 2 weeks/year of tax/bureaucracy overhead)
The phenomenon cannot be more obvious when viewed at state levels in India. The Gujarati and Marwadi communities are far more enterprising than others in India. This is while the federal rules that all communities live under remain the same.
Anecdotally, the cause for this seems to neatly fall out of my conversations with friends from these communities.
There is cultural weight to being a person who doesn't work for someone else. There is cultural pride in ownership that does not exist in most others.
On the other hand, Maharashtrians seem to value being able to separate work and life. Being able to sleep without worrying about your enterprise and knowing that the same reliable amount will be deposited in your account every month is considered important.
These fundamental differences manifest even when people live under other geographical, political and economical variables.
Fact is that 1860's Japan lacked all sort of resources, particularly natural ones. In the absence of resources, there isn't much that you can do to bootstrap yourself. With all the workers you need and the money to pay them, you can't build a house if there isn't any timber, mortar and bricks. Therefore, you're better off simply doing nothing, or things that don't require much, like playing music and writing poetry.
Edit: warm weather also happens to correlate with another natural resource: oil. Oil tends to produce a similar dynamic -- whoever owns the oil owns the government and badly mismanages the government for their own benefit. The exceptions prove the rule: Alaska and Norway were both established, egalitarian societies before the oil was found, in contrast with Middle Eastern petrostates, Russia and Venezuela.
The problem in Venezuela is that the state has been weak and ineffective. Weak != Small, you have this suffocating bureaucracy which does nothing.
Also capital and risk distribution. I visited Amsterdam and was interested in their history and how it took off after the invention of the corporation.
Corporations can end and the knowledge from them can go into a new venture (redemption). They can also raise capital through distributed ownership and distributed risk.
I wonder if anyone has written a history of the Dutch economy that can be also accessible to non-Dutch readers (i.e. translated to either English or French or Spanish). From a very outside view (i.e. mine) the Dutch used to be a very entrepreneurial society/people in the 1600s going into the 1700s, but it seems that by the 1800s that spark had gone. They're of course still one of the most developed nations in Europe and in the world, but it looks like in terms of risk-taking they're the same as us, the rest of the Europeans, i.e. behind the Americans and I'd say even the Chinese.
As a similar example the Italian economic historian Carlo Cipolla was blaming the wars and the associated pests/famines of the early 1600s for Italy's towns' fall into economic irrelevance. Not sure if they're easily accessible on the Internet, but in one of his books [1] he presents some charts where the population of entrepreneurial Italian cities of that time such as Firenze, Venice, Brescia, Lucca or Bergamo felt by more than 50% during 1600-1630 (give or take), which caused them not to be able to compete against Flemish and especially English clothes-related industry. I wonder if anything similar happened to the Dutch.
[1] https://www.amazon.com/Before-Industrial-Revolution-European...
I'd say the spark is doing just fine, but it ignited a blaze that swept much of the rest of Europe, and the New World. The innovations that Holland rode to success just aren't uniquely Dutch anymore, so now they're back to competing on an even playing field.
The same happened to England after the industrial revolution. Once the new techniques spread to Germany, the US and elsewhere their special utility to the UK wasn't so special anymore.
The Dutch have embedded innovation/entrepreneurship so deeply into their society, it looks very different from American-style innovation. There are so many little innovative things here that startups would never get to. It is continuous, but not relentless -- as in, it occurs within the paradigm of working hours. Further, it tends to reflect the systemic intelligence of organizations, at a large and small scale.
Example Domains:
Transportation (all aspects), payment (online and off), festivals (incredibly innovative!), road construction, garbage pickup (yes! It's so futuristic!), child care & education, psychology, medicine...
In any of these areas, I can readily think of smart innovations that would impress Americans. The innovations are not of the "Uber for X", digital startup-based type. So, seeing the lack of Dutch statups in VC portfolios might suggest a less innovative culture. Here, entrepreneurship often occurs within the context of existing systems and organizations. It's a different, complementary way to think about things -- I rather like it.
Also, there are only 17 million people in the Netherlands. It's a much smaller market and startups that successfully capture this market don't necessarily transfer to external markets.
Further, when things are working really well, there isn't always a need for disruption... Nevertheless, things in the Netherlands never seem "done". Sure, there is great transportation, healthcare and education -- but that's because they are always ripping it up and building the future of it. Sometimes in the States, things can seem like we are just trying to keep the status quo from falling apart too badly.
Is our garbage pickup futuristic? It's certainly efficient and practical (which are probably the most important and most typically Dutch values), but there's nothing about underground containers that's out of reach for other countries.
I think much of our innovation and efficiency is actually in government organisations, from garbage pickup to our efficient and well-maintained infrastructure (you really notice the road quality drop when you cross the border with Belgium or Germany), to our 'polder model': talks between government, employers and labour unions to decide on employment standards that everybody can agree to so we won't have any strikes.
It's true that we don't have the kind of startup culture that California has, despite attempts from the government. I'm not sure why, but then again, even in the 17th century, our big innovation was the invention of the multinational, globe-spanning corporation, not the small startup. And a big part of the innovation there was not so much the risk taken, but the way those risks were mitigated: financial products that spread the risk around. Many ships at the time were funded were funded through a system of life insurance.
Consider the sheer amount of government funding it took for Silicon Valley to become possible, before any other factors. Among other factors it took decades of massive military funding for the radio and semiconductor industry to lay the foundation and attract the talent that would later branch out.
The biggest barrier to replicating this is government willingness to pour that kind of money into tech in a single area.
I've been part of an Amsterdam startup and 'started' my own companies with various people a few times, and my impression is that there are a few reasons for this:
1. much as it's easy to start a company, it seems difficult to get funding. The government seems to be trying, but it still feels less than what I read about SV (or at least SV in the past?).
2. the market is much smaller. once you need to deal with other countries with other languages, (tax) regulations that are often much more complicated and bureaucratic, cultural differences, etc., things get much more difficult, and I've noticed multiple small startups around here just don't bother.
3. for tech startup type workers at least, but probably for most workers here, there's less of a culture of jumping into a startup. we like our steady jobs, we are quick to complain about overwork, and there's all sorts of (good) protections that possibly make it more difficult to find employees and grow.
In regards to 3, the startup I worked for consisted of a just-out-of-school programmer, a wealthy-and-connected but inexperienced CEO, and a fantastic and experienced designer who, in his forties, decided to do something 'risky' and 'new'. He also came from wealth but had done very well for himself too. and later a social media/marketing person who was just out of college.
So the startup either involved people who could put it on their CV regardless of how well things went, or people who could afford faffing about for a while. I suppose I was in the latter camp, although that's more because I just don't spend much money and make enough as a front-ender currently that I can do 'cool' things without much skin in the game.
I hope NYC adopts the system. I agree, it is totally within reach.
If the Dutch are just as entrepreneurial as Americans, then there will be way more successful Americans and American companies because the USA is so much bigger. Ditto for China. You'd really need to calculate "successful entrepreneur per 100,000 people" or something like that.
Also, selection bias. You're on a tech website. Switching to Denmark for a second, the Danes are incredibly ahead and successful in the wind power industry. How many people think of Denmark as a tech centre? Probably not many. We focus on software and there, one or two regions of America have done extremely well so we give it more attention.
That said, I do believe Europe and the EU in particular is discouraging innovation and entrepreneurialism at a pretty staggering rate. The Vestager rulings send a loud message that the EU considers hurting competitors to be anti-competitive behaviour (vs harm to consumers). That's a pretty big disincentive to work hard to get big.
Read up on SEC decisions (including the AMD vs Intel one) and you'll see similar lines of thought
Because in the end hurting competition is hurting consumers. Like in MS actions against BeOS
Even that wouldn't be enough, because the supporting apparatus and immediate market for a Dutch entrepreneur would be still very much smaller than for a US based on - so Dutch entrepreneurs should expect less support and not as good environment for their steps to grow their company, even if as a ratio there are e.g. twice the Dutch entrepreneurs for 100,000 people compared to the US.
>That's a pretty big disincentive to work hard to get big.
That sounds good. Now if we (EU) could also prevent other countries from having corporate behemoths that would be perfect...
Google is a medium sized company by many measures. There are companies with far more employees, offices, and physical footprint for example. Who are you to say that this company is a "behemoth" but for example Volkswagen ($221 billion of yearly revenues) is not? Where is the line drawn?
I think a lot of entrepreneurs are motivated by the thoughts of huge success. If a government says that success will be punished the moment two-bit competitors complain (as e.g. tiny websites that nobody ever cared about complained about Google Shopping), then why set out on the arduous journey to create a big firm?
AMD vs Intel is different. In cases like that, it's obvious how to avoid problems: don't pay companies to not use your competitors. That seems reasonable.
But with something like Google Shopping vs companies so small and worthless that the EU's press release doesn't even bother to name them (nor does Wikipedia's page on the case), it's not at all clear what lessons entrepreneurs should draw. Don't add features to your own product? Don't be too successful? I followed all three cases closely and frankly to me the enforcement looks arbitrary and vindictive (and yes I'm an "EU citizen"). The Commission decided - entirely arbitrarily - that Google Shopping must be the dominant way to buy things online, which will come as news to people who use Amazon or Ebay or European equivalents like Zalando.
No, I assume I know what kind of businesses I prefer to deal with, and that is smaller...
>Google is a medium sized company by many measures. There are companies with far more employees, offices, and physical footprint for example. Who are you to say that this company is a "behemoth" but for example Volkswagen ($221 billion of yearly revenues) is not? Where is the line drawn?
Wherever the people and their votes/laws want to draw it, with as many exceptions to the rule as they like?
>I think a lot of entrepreneurs are motivated by the thoughts of huge success. If a government says that success will be punished the moment two-bit competitors complain (as e.g. tiny websites that nobody ever cared about complained about Google Shopping), then why set out on the arduous journey to create a big firm?
Well, then don't. That's fine by me (people not setting out "to create a big firm"), and would be totally OK in my perfect world.
Now those are personal preferences. But ,y main point is not communism but democracy: people being asked, and being able to decide and set course for the society they like.
As opposed to letting the "laws of historical materialism" (communism), the fuhrer (fascism), or "the invisible hand of the market" (capitalism) decide for them...
http://blog.yalebooks.com/2015/08/11/the-worlds-first-corpor...
https://qz.com/219270/bazacle/
https://en.wikipedia.org/wiki/Bazacle_Milling_Company
https://www.sciencedirect.com/science/article/abs/pii/S03044...
Sadly the east India trading company resulted in untold millions of death for people on the wrong end. But it made a lot of money.
Another bit I learned was how the Dutch stopped Napoleon by flooding their country.
They help each other out, you can use my van to pick things up, you can use the corner of my store to start your own store, etc.
I suspect this is how it is across most of the world though. If you can't rely on 'society' and particularly the government or legal system, you find ways to rely on each other instead. In the 'developed world' those social bonding muscles have atrophied away.
I see a decent number of Japanese businessmen where I am. I know they're not at exactly representative of Japan. They're part of companies that thought investing in Silicon Valley would be a good idea and were willing to move here.
[0] In a good way. Several people have noted that the Igbo pretty much invented venture capital.
We know this is at least partly cultural because genetically Turks in Turkey are over 90% Greek or Armenian with some additional Balkan and Caucasus contribution and after mutual ethnic cleansing rid Turkey of Christians and the rest of the Balkans of Muslims Turks eventually filled those socioeconomic niches. Until Erdogan it looked like Turney would be richer than Greece pretty soon.
Any Chua wrote a great book on merchant minorites, World On Fire.
(For more context, there are three dominant ethnic groups in Nigeria, and none of them form a majority. The largest group - the Hausa - doesn't make up even 30% of the population, and the Igbo make up over 20% in current estimates)
> The Igbo tried to secede from Nigeria after independence and it was an utter bloodbath.
This was far, far more complicated than is being made out here.
https://en.wikipedia.org/wiki/1966_anti-Igbo_pogrom
The 1966 anti-Igbo pogrom was a series of massacres committed against Igbo people and other people of southern Nigerian origin living in northern Nigeria starting in May 1966 and reaching a peak after 29 September 1966.[1] These events led to the secession of the eastern Nigerian region and the declaration of the Republic of Biafra, which ultimately led to the Nigeria-Biafra war . The 1966 massacres of southern Nigerians have been described as a holocaust by "Greene -1975 . The Struggle for Secession 1966–70: A Personal Account of the Nigerian Civil War by N. U. Akpan. The Nigerian Civil War 1967–70. The Royal African society in January 1975 and others have variously been described as genocide.
https://en.m.wikipedia.org/wiki/Nigerian_Civil_War
Persecution of Igbo Edit From June through October 1966, pogroms in the North killed an estimated 80,000 to 100,000 Igbo, half of them children, and caused more than a million to two million to flee to the Eastern Region.[77] 29 September 1966, was considered the worst day; because of massacres, it was called 'Black Thursday'.[78][79]
Ethnomusicologist Charles Keil, who was visiting Nigeria in 1966, recounted:
> The pogroms I witnessed in Makurdi, Nigeria (late Sept. 1966) were foreshadowed by months of intensive anti-Ibo and anti-Eastern conversations among Tiv, Idoma, Hausa and other Northerners resident in Makurdi, and, fitting a pattern replicated in city after city, the massacres were led by the Nigerian army. Before, during and after the slaughter, Col. Gowon could be heard over the radio issuing 'guarantees of safety' to all Easterners, all citizens of Nigeria, but the intent of the soldiers, the only power that counts in Nigeria now or then, was painfully clear. After counting the disemboweled bodies along the Makurdi road I was escorted back to the city by soldiers who apologised for the stench and explained politely that they were doing me and the world a great favor by eliminating Igbos.
Do you actually have anything to back this up that isn't a cursory read of Wikipedia? Who exactly of the over four hundred ethnic groups in Nigeria do you think is the majority to the Igbo "minority"? How on earth are you classifying populations in diaspora to people who, again, are living in their own country?
> they’ve clearly been subjects of mob mass killings, aka pogroms as well as government sponsored mass killings based on their ethnic identity
Ethnic discrimination does not automatically equal "merchant minority" (or a minority at all, in fact). The ethnic discrimination against the Igbo in Nigeria is a more complex situation than "foreigners bad" or "minorities different"; it's rooted more in colonialism than in anything else. Which is understandably difficult for people in the West to understand, but it would probably be easier if they stopped trying to fit everything into the boxes they know and actually engaged with what was before them.
> If you guessed the ethnic makeup of Nigerians based on US or British populations you’d think Igbo were at least half of the population, not a minority.
And the other half would almost entirely be Yoruba, but I don't see you leaping to call the Yoruba a merchant minority.
They’re also clearly disproportionately involved in commerce. As you said
> there's an ethnic group in my country - the Igbo - that are so pervasively, aggressively[0] entrepreneurial that it's become a meme.
If they’re a minority that’s disproportionately involved in trade that makes them a merchant minority.
They also have non-central features of being a merchant minority, like being subject to pogroms but as I said previously Yankees are another example which were never subject to that experience. In Ireland the Protestant minority used to fill a similar role.
> And the other half would almost entirely be Yoruba, but I don't see you leaping to call the Yoruba a merchant minority.
If the Hausa, Fulani and Yoruba had been put into one state by the British, the Igbo had not abc there was enough inter-state hostility to prevent migration the Yoruba would be that *Nigeria’s merchant minority. The Yoruba are clearly more commercial than either of the other groups. But that didn’t happen and the Igbo are Nigeria’s merchant minority.
Classification as a merchant minority is a matter of degrees. Protestants in Ireland, Yankees in the US, Germans along the historic borderlands with the Slavs, all of these groups were a lot more involved in trade than the majority popular but they also engaged heavily in primary production. Classic merchant minorities like Jews, Armenians or Parsis didn’t. Igbo are clearly closer to the first group than the second in those areas where they’re a majority.
> The Igbo may have many different subgroups but they’re conscious of their own existence and other groups are conscious they exist.
I don't quite see how that has anything in the slightest to do with what I said - I mentioned nothing about fuzzy boundaries, and what you are "sure of" unfortunately (or fortunately) has no actual bearing on what is real. The barest real knowledge of Nigerian history would have informed you that the Igbo have been in the north of the country for less than a hundred years, which is pretty much no time at all when talking about ethnic groups.
> As you said >> there's an ethnic group in my country - the Igbo - that are so pervasively, aggressively[0] entrepreneurial that it's become a meme.
If you did not understand what I said, you might as well have said so rather than go on a Wikipedia binge to seem knowledgeable. That statement was referring to the society-wide master-apprentice system that the Igbo have, undeniably capitalist but inherently prioritizing the success of the collective over the success of the individual.
> If they’re a minority that’s disproportionately involved in trade that makes them a merchant minority.
They are not a minority, but I am rather tired of trying to explain that to somebody who apparently thinks US/European-type demographics are the only kind that exists. How, exactly, do you call one of three major groups that each make up twenty-something percent of a population a minority without falling over the cognitive dissonance?
> They also have non-central features of being a merchant minority, like being subject to pogroms
They were not subject to pogroms because they were a "minority", jesus christ. The '66 pogroms in Northern Nigeria were part of a countercoup in disproportionate response to a coup d'etat earlier the same year which had ended the lives of (amongst others) two especially beloved Northern political leaders - Prime Minister Tafawa Balewa and the Northern premier/Sokoto's crown prince Ahmadu Bello - and placed Easterners in power instead. The pogroms and the ensuing civil war, which Western Nigeria took opportunistic advantage of, were largely an attempt to reconsolidate power in the North.
Oh actually never mind me, it was just "'minorities' bad" and not a complex political situation in a newly independent country.
> But that didn’t happen and the Igbo are Nigeria’s merchant minority.
Or consider that of the Igbo are not among the ethnic groups in Nigeria that could possibly be called merchant minorities - but that would actually require knowing more than a quick Google about the country. For example, it's rather clear that you're unaware of the history between the Yoruba and the Hausa both prior to and during the colonial era, or that the Fulani are an actual minority ethnic group both in Northern Nigeria and in the country as a whole and would actually be fairly classifiable as a "merchant minority" if we cared to apply political labels made for populations in diaspora to people living in their own country - the Fulɓe are semi-sedentary, widely dispersed, tend to live in ethnic enclaves, and have formed several ethnic subgroups throughout West Africa due to integration with clear majority populations.
You spoke of Nigeria’s 400 ethnic groups as if this was dispositive of the Igbo existing. Having subgroups does not mean the Igbo do not exist. Being in what is now Nigeria for less than a hundred years is equally irrelevant.
> As you said >> there's an ethnic group in my country - the Igbo - that are so pervasively, aggressively[0] entrepreneurial that it's become a meme. If you did not understand what I said, you might as well have said so rather than go on a Wikipedia binge to seem knowledgeable. That statement was referring to the society-wide master-apprentice system that the Igbo have, undeniably capitalist but inherently prioritizing the success of the collective over the success of the individual.
If you meant to write something different that’s fine but what you wrote is obviously true. Without regard to master apprentice models the Igbo do more buying and selling as middlemen, whether in wholesale or retail trade than other Nigerian ethnic groups. They are more educated and set up more businesses.
>> If they’re a minority that’s disproportionately involved in trade that makes them a merchant minority.
>They are not a minority, but I am rather tired of trying to explain that to somebody who apparently thinks US/European-type demographics are the only kind that exists. How, exactly, do you call one of three major groups that each make up twenty-something percent of a population a minority without falling over the cognitive dissonance?
It’s entirely possible for a state not to have a majority ethnic group. That means all ethnic groups are minorities. If one of those groups is disproportionately mercantile they’re a merchant minority. If they’re disproportionately likely to enlist in the military that makes them a military minority. The Hausa are way over represented in the Nigerian military compared to their share of the population, like Southerners in the US. They’d be a military minority.
>> They also have non-central features of being a merchant minority, like being subject to pogroms
>> They were not subject to pogroms because they were a "minority", jesus christ. The '66 pogroms in Northern Nigeria were part of a countercoup in disproportionate response to a coup d'etat earlier the same year which had ended the lives of (amongst others) two especially beloved Northern political leaders
>> Oh actually never mind me, it was just "'minorities' bad" and not a complex political situation in a newly independent country.
A complex political situation in a newly independent country is entirely compatible with pogroms. People were killed for being Igbo in large numbers, by civilians and the state. This happened in part because of the assumed political loyalties of Igbo people. I imagine we can both agree on that.
> But that didn’t happen and the Igbo are Nigeria’s merchant minority.
> Or consider that of the Igbo are not among the ethnic groups in Nigeria that could possibly be called merchant minorities
Then which ethnic groups are better candidates? Is there a group that is almost entirely engaged in trade with minimal involvement in primary production, and that does so for the market when it does?
> For example, it's rather clear that you're unaware of the history between the Yoruba and the Hausa both prior to and during the colonial era, or that the Fulani are an actual minority ethnic group both in Northern Nigeria and in the country as a whole and would actually be fairly classifiable as a "merchant minority" if we cared to apply political labels made for populations in diaspora to people living in their own country - the Fulɓe are semi-sedentary, widely dispersed, tend to live in ethnic enclaves, and have formed several ethnic subgroups throughout West Africa due to integration with clear majority populations.
The Fulani are a terrible candidate for a merchant minority. They’re pastoralists who are widely dispersed across West Africa because they kept on conquering other people as nomads who can move their wealth and people large distances in short amounts of time are wont to do. Semi-sedentary herders of cattle, some of whom have settled permanently in towns, with insignificant numbers of settled farmers of crops are not merchant minorities under any understanding of the term. Even less so when they were the pre-colonial ruling class in the areas of Nigeria where they’re a minority. And being in one’s own country is hardly dispositive of being a merchant minority. The Armenians in the Ottoman Empire and Jews in inter-war Poland were merchant minorities in their own countries. If the Igbo were predominantly concentrated in their own country they’d be a merchant majority there, like Jews in Israel.
1. Do you tolerate failure? Is it treated as a learning step or are you marked for life ( huge stigma in some societies,IMO America does this better than anyone else.).
2. Individual vs Group Think ( lots of societies don't tolerate people who think differently, frequently ostracized or outcast).
3. Capital
4. IP protection
5. Immigration Policy - Do you allow immigrants in? Immigrants are hungry, they come with nothing, expect nothing and have huge appetite for risk.
I say this from experience, was living in both over bureaucratised country with such complex regulations that even bureaucrats could not follow. In such country your business relies on mood/honesty of public servant who handles you. I was also living in the country where I have not heard from state for 7 years while I was running my business there. I was paying my fair share of taxes and state was not throwing roadblocks under my legs.
After a bit of thinking I'd also stress out how important juridical system is. If you have to wait 10 years for ruling you will be definitely more risk averse.
From all of those cities Amsterdam and Tel Aviv a lot more innovative and the number of entrepreneurs was high (at least felt like it)
I think that there are few criterions that a city need to have to become a tech hub
- Relatively small city - Society who worship startups and entrepreneurs - Many Programmers and engineers (In Israel every 4 months few hundred talented programmers are releasing from the top units in the Israel Defence Forces, bringing high quality manpower to the ecosystem)
There are probably more criterions, those are just few I thought about now
IMO I wouldn't conclude that the "high quality manpower" is due to the half of the half of the population.
[0] - https://web.archive.org/web/20110724085052/http://www.vtg.ad...
I'm not saying that she doesn't add anything that hasn't already been published, I don't know if I see it though.
As a result, all of the traditional determinants of entrepreneurial activity, such as capital availability, education infrastructure, &c... aren't going to matter that much because her DV only measures total entrepreneurial activity (e.g., person A opens a street stand because they don't have any other way of generating income) or variables that are heavily correlated with TEA, which isn't what most folks are really interested in when they talk about entrepreneurship.
However, her sample is also going to be biased in favor of developing countries that have higher levels of normative western-culture beliefs (e.g., support for gender equality), because developing countries with university systems sophisticated enough to know about & participate in a project such as GEM (and generate good data) are also more likely to have already started the process of incorporating western norms into their culture.
Gender equality is a massive value added, and I know a lot of people who have done actual research which proves it. But, you can't run a couple of regression models on GEM data and declare that capital access, geography, education, and all of the other traditional determinants of entrepreneurship aren't influential.
Could you expand on this point? What does it include outside of gender equality. The idea that this is a "western-culture norm" seems slightly misleading in the sense that gender equality in the workplace was much earlier and better developed in communist countries that would usually be contrasted with "western culture" albeit of course also originating in Europe.
It's seen everywhere in life and starts with kids. When you have one kid alone, he/she is less likely to jump of a 10m cliff, but if you have a group of kids who all jump into the water then others will follow. It's the same with adults, except you replace cliff jumping with risk taking/innovation/startups.
I base that opinion, because I've seen a lot of friends/family who come from a very risk averse culture/country move to a different place and then instantly change their attitudes as they see that it's more normal elsewhere and therefore they acustom to the thinking that it's more normal and ok to do it.
A lot of the people that left the proverbial Old World for (e.g.) the US were often the most hopeful, so that's why the US is (stereotypically) optimistic. The people that stayed behind were the ones that were more dour and/or laid back.
The religious upheavals following the Reformation and the insane demographic growth following in the wake of industrialization drove the settlement of overseas colonies, not ethereal qualities like optimism and entrepreneurship.
Italy: constant war, killing, etc, and we produced the Renaissance, Leonardo and Galileo, Music, art, etc;
Switzerland: 500 years of constant peace, and all they invented is hemmental an nice watches.
- Ownership of IP: IP produced in your own time on your own equipment doesn't belong to your employer.
- Non-competes: Not enforceable in CA
- Access to capital: Plenty in CA.
I'd say the first two points are what differentiate Silicon Valley from the rest of the tech capitals.
I'm in Seattle, and I've worked at Microsoft, Amazon, and a couple of smaller companies, and I've run across quite a few people who could've gone to either Seattle or the Valley, and deliberately picked the former because they didn't want to participate in the startup rat race and just wanted a stable job.
And of course, this trend would be a positive feedback loop over time: the more the Valley is associated with entrepreneur culture and Seattle is not, the more that potential entrepreneurs go to the Valley and the day-jobbers go to Seattle, which reinforces the original perception.
Again, this is all guesswork, but it does line up with my anecdotal experience.
Look at state capitals in the US as compared to commercial cities as an example. In general, big populations of people with high security (ie. .gov workers) and contractors to the same equal stable, but boring places.
Entrepreneurial Activity: GEM (https://www.gemconsortium.org/)
Country Level Vars: World Bank Dataset & Project Globe (https://globeproject.com/)
The models are panel regressions w. fixed effects in Stata (you can recreate this with the PLM library in R).
This is how virtually every pre-print is formatted. Scroll to the bottom and you will find all of the tables & figures.
Laying out the paper is for the journal to do.
-differing culture making it more or less likely for someone to go down that road and making it more or less acceptable by others.
-differing legal frameworks that make it easier or more difficult to pursue entrepreneurship and make a living from it.