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Latin America Seeks Research based Policy Design

Mark Marich on July 14, 2014 Source: Policy Dialogue on Entrepreneurship

More and more countries are interested in promoting entrepreneurial growth -- demanding ever-improving data and information. The Argentina-based research organization PRODEM has responded to this demand with its Index of Systemic Conditions for Dynamic Entrepreneurship (ICSEd-Prodem).

The authors define dynamic entrepreneurial ventures as those that, within a few years, become small or medium sized firms with further growth potential based on differentiation and innovation. According to PRODEM Director Hugo Kantis, the Index is a tool that helps policymakers identify a country’s main strengths and weaknesses, and to design an agenda of effective initiatives to foster entrepreneurship.

For this research project, the PRODEM team followed OECD guidelines and best practices, and considered the specific factors that influence emerging economies. The conceptual framework for the Index was first conceived in 2004 and has been refined throughout a decade of research with the collaboration of international organizations, interested governments and institutions. The Index’ ten pillars combine more than 40 variables and reflect social, cultural, economic and political factors that influence the entrepreneurial process.

The first publication of the Index is focused on Latin America but Kantis seeks to extend it to other countries and regions interested in benchmarking their entrepreneurship ecosystem.

A few insights from the Latin America analysis

According to Susana García Robles, specialist at the Inter-American Development Bank’s Multilateral Investment Fund, the release of the Index is timely, since it fills a demand for improved conditions for entrepreneurship in the region among policymakers, development agencies, academia, accelerators, investors and other stakeholders.

  • Chile presents the best systemic conditions for dynamic entrepreneurship, followed by Mexico, Brazil, Costa Rica and Argentina. However, these top five regional countries are far below from the top global performers (i.e. United States, Finland and Singapore).
  • Latin America has benefited from favorable demand conditions, which have been driven by the higher international prices for its exported goods and the expansion of the region’s middle class. In addition, culture has evolved positively for entrepreneurs, who are now valued in most countries in the region. In both dimensions, demand conditions and culture, Latin America registers narrower gaps with respect to the economies leading the international ranking. However, this situation has not yet translated into an entrepreneurship boom in the region, suggesting weaknesses are still holding forward momentum.
  • One the greatest weaknesses is the lack of entrepreneurial human capital with the skills to create and grow new businesses. Science and technology educational platforms are not yielding the contributions to human capital which the region needs to unleash innovation. Nonetheless, a positive observation is that entrepreneurship education has gained ground at universities.
  • Financial and social capital are still too low to facilitate powerful networking. This reduces the chances that innovative value propositions by strong entrepreneurial teams will emerge. The region’s new accelerators and investment funds seek to address this situation.

Category:  Global  Tags:  PRODEM, Inter-American Development Bank, Multilateral Investment Fund, IDB, MIF, OECD, ICSEd, Hugo Kantis, Susana Garcia Robles

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