Entrepreneurship key to escaping poverty

image courtesy of Business Edge

Entrepreneurship and business are rarely accorded a serious place in discussions around drivers of economic development. A cursory look at the numbers makes this seem very surprising. China has pulled approximately 600 million people out of absolute poverty since Deng Xiaoping unleashed market reforms in the late 1970s. Never in human history have so many people been pulled out of grinding poverty is such a short span of time.

Similarly, South Korea has gone from a per-capita income of $291 in 1970 to $20,000 today. Even reform laggards like India have managed to pull a couple of hundred million people out of grinding poverty since economic reforms were initiated. Across the world, we find countries that created an entrepreneurship and business friendly environment were successful in reducing poverty drastically.

Despite the evidence, there are strong lobbies in emerging markets that make the claim that business friendly policies are anti-poor. Personally, I am in favor of redistribution, like these lobbies claim to be. However, what do you redistribute? One cannot, after all, redistribute poverty. One can only redistribute wealth, and to redistribute it, you have to create the wealth first...[continue reading]