“There isn’t a word for ‘entrepreneur’ in Colombia. The closest term they have is probably ‘drug lord,’” Judy Robinette quipped to an audience of international business women in Salt Lake City while discussing her work with the World Bank building a culture of entrepreneurship in Colombia.
Her facetious statement has some tough truths behind it. Latin America has lagged behind on the global stage for much of the past century, and was passed by during the economic boom years before the Great Recession by the likes of China and India. But tough times and the creative disruption—or destruction—of all the old economic models are clearing the way to another chance for Latin America. It will not come easily, though.
Each year, the World Economic Forum hosts a regional summit to discuss at the highest levels the issues Latin America faces. The 2013 World Economic Forum on Latin America came at a moment as growing fears over China’s slowing economy and frustrations over the rising costs of doing business (both economic and social) are finally convincing some manufacturers to transfer their production contracts to factories in their own hemisphere.
This influx of Foreign Direct Investment is good news for Latin America—but not great news. The influx of capital will kick start job creation, but are those jobs quality or contributing to long-term growth?
Opening the three day conference in Lima, Peru, Marisol Argueta de Barillas, Senior Director, Head of Latin America, at the World Economic Forum, spoke on the 2013 meeting’s theme, Delivering Growth and Strengthening Societies: “[I]t is timely to invest in human capital and implement visionary and innovative policies to turn growth into long-term development with social prosperity and environmental sustainability. It is clear that economic progress without social development is not sustainable, while social development without economic growth is unviable.”
What Latin America needs is a whole scale attempt to create a sustainable growth economy based on their own resources and human capital—and to do that, Latin Americans must begin with finding the courage to fail.
Failure comes with a long stigma in Latin America. Blame it on machismo culture and pride, or blame it on a long history of business and political corruption—whatever the cause, it has created an environment in Latin America where ideas cannot be tried out unless success is virtually guaranteed. This means attempts at government reform or social policy inch forward, moving only far enough to secure benefits for a vital voting block. This means that high-risk innovation from small business owners seeking to disrupt models is virtually non-existent. A mistake, so highly celebrated in North America’s iterative start-up culture, can mean the end of a career. Failure, rather than being a learning experience from which to move forward, instead proves to be socially corrosive and economically limiting.
So where does the region begin in changing these attitudes? It cannot come from the government alone—particularly since the governments of Latin America are considered to be one of the most entrenched in these mindsets. According to the 2013 Edelman Trust Barometer, a study which “measures the state of trust around the world by exploring trust in institutions, industries, leaders, and the impact recent crises in the banking and financial sectors,” Latin America leads the world with the largest gap in trust between the private sector over the public sector. The countries in which the largest gaps of trust in business over government could be found were Mexico (a 41 point difference), Brazil (a 31 point difference), and Argentina (a 30 point difference); the only other countries to come so close to such a gap were Indonesia at 27 points and Spain at 24 points.
However, according to the Trust Barometer, technology far and away is the most trusted industry, in both emerging and developed markets, with 77 percent of respondents in 2013 claiming to trust technology for the services provided and jobs created. This suggests that the way forward in Latin America will not be with direction from the top down; rather, the inertia can be overcome by grassroots efforts—by Latin Americans taking risks to change their communities, and slowly, their countries, bit by bit.
Three areas participants at the Forum discussed repeatedly as areas where change can begin were education, entrepreneurship, and ICT.
Without immediate attention to the state of education in Latin America, the region is going to find itself facing a talent shortage. Currently, Mexico is in need of 1.1 million engineers, but there are not enough students graduating from engineering programs in the country to begin to fill that need, let alone create a competitive environment for the best and brightest workers. The region overall will need 50 million more jobs over the next 10 years, but much of what is being taught in schools today will not be needed by the business sector by the time students graduate, creating a skills gap that will only exacerbate an already-high youth unemployment problem.
Governments recognize the need for change. For example, Mexican President Enrique Peña Nieto announced at the meeting a new constitutional amendment in his country to prioritize education, the purpose of which “is to make sure that education in the coming years will be of higher quality, and will lead to capacity building of our human resources.” Panama, according to President Ricardo Martinelli, has asked the business sector to participate more in policymaking and accountability measures, and as a result, the country is seeing initiatives in education where teachers are trained in the latest technologies by Microsoft and IBM.
In fact, it is this intersection of public-private partnerships where entrepreneurship has so much potential. Currently, 60 percent of employment in Latin America is through microenterprises, with limited ability to grow; however, many of the microenterprises are caught in the informal sector, separating them from access to institutions that could provide them with leverage for growth. What is needed is an education on business and entrepreneurship in schools—not only to help grow the economy at a local level, but also to catalyze innovative and entrepreneurial thinking in students. This, in turn, creates an ongoing cycle of innovation, experimentation, and risk-taking.
Never has this been easier to do than today, as the global technology revolution creates ever-more ways to democratize access to information, data, and resources. But this is all dependent on internet access. According to the World Economic Forum’s 2012-2013 Global Competitiveness Report, Latin America has one of the lowest rates of information and communication technology (ICT) connectivity in the world. The region suffers from low levels of infrastructure development in general (including roads, airports, and rail lines), but in an interconnected world, access to the internet and mobile devices is more important than ever.
Increased ICT infrastructure and cross-sector communications can help address the trust gap between citizens and their governments, increasing stability; provide new economic opportunities, increasing innovation and growth while lowering the cost of doing business; and can create an environment that fosters entrepreneurship. But there must be solid public-private partnerships established and dedicated to connecting even the most remote and isolated village.
“It is not just one reform in principle,” Professor Klaus Schwab, Executive Chairman of the World Economic Forum, said in the meeting’s opening plenary. “It [takes] a complete societal and institutional reform to prepare a country for the future.”
In agreement with Professor Schwab’s statement, President Martinelli called for action. “Latin America is no longer a mere spectator. Latin America is now a player.” The region has the potential and the ability, if it can only find the courage to fail at some points along the road to success.
Photo copyright World Economic Forum/Benedikt von Loebell.
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The Courage to Fail': The World Economic Forum on Latin America 2013
July 18, 2013
“There isn’t a word for ‘entrepreneur’ in Colombia. The closest term they have is probably ‘drug lord,’” Judy Robinette quipped to an audience of international business women in Salt Lake City while discussing her work with the World Bank building a culture of entrepreneurship in Colombia.
Her facetious statement has some tough truths behind it. Latin America has lagged behind on the global stage for much of the past century, and was passed by during the economic boom years before the Great Recession by the likes of China and India. But tough times and the creative disruption—or destruction—of all the old economic models are clearing the way to another chance for Latin America. It will not come easily, though.
Each year, the World Economic Forum hosts a regional summit to discuss at the highest levels the issues Latin America faces. The 2013 World Economic Forum on Latin America came at a moment as growing fears over China’s slowing economy and frustrations over the rising costs of doing business (both economic and social) are finally convincing some manufacturers to transfer their production contracts to factories in their own hemisphere.
This influx of Foreign Direct Investment is good news for Latin America—but not great news. The influx of capital will kick start job creation, but are those jobs quality or contributing to long-term growth?
Opening the three day conference in Lima, Peru, Marisol Argueta de Barillas, Senior Director, Head of Latin America, at the World Economic Forum, spoke on the 2013 meeting’s theme, Delivering Growth and Strengthening Societies: “[I]t is timely to invest in human capital and implement visionary and innovative policies to turn growth into long-term development with social prosperity and environmental sustainability. It is clear that economic progress without social development is not sustainable, while social development without economic growth is unviable.”
What Latin America needs is a whole scale attempt to create a sustainable growth economy based on their own resources and human capital—and to do that, Latin Americans must begin with finding the courage to fail.
Failure comes with a long stigma in Latin America. Blame it on machismo culture and pride, or blame it on a long history of business and political corruption—whatever the cause, it has created an environment in Latin America where ideas cannot be tried out unless success is virtually guaranteed. This means attempts at government reform or social policy inch forward, moving only far enough to secure benefits for a vital voting block. This means that high-risk innovation from small business owners seeking to disrupt models is virtually non-existent. A mistake, so highly celebrated in North America’s iterative start-up culture, can mean the end of a career. Failure, rather than being a learning experience from which to move forward, instead proves to be socially corrosive and economically limiting.
So where does the region begin in changing these attitudes? It cannot come from the government alone—particularly since the governments of Latin America are considered to be one of the most entrenched in these mindsets. According to the 2013 Edelman Trust Barometer, a study which “measures the state of trust around the world by exploring trust in institutions, industries, leaders, and the impact recent crises in the banking and financial sectors,” Latin America leads the world with the largest gap in trust between the private sector over the public sector. The countries in which the largest gaps of trust in business over government could be found were Mexico (a 41 point difference), Brazil (a 31 point difference), and Argentina (a 30 point difference); the only other countries to come so close to such a gap were Indonesia at 27 points and Spain at 24 points.
However, according to the Trust Barometer, technology far and away is the most trusted industry, in both emerging and developed markets, with 77 percent of respondents in 2013 claiming to trust technology for the services provided and jobs created. This suggests that the way forward in Latin America will not be with direction from the top down; rather, the inertia can be overcome by grassroots efforts—by Latin Americans taking risks to change their communities, and slowly, their countries, bit by bit.
Three areas participants at the Forum discussed repeatedly as areas where change can begin were education, entrepreneurship, and ICT.
Without immediate attention to the state of education in Latin America, the region is going to find itself facing a talent shortage. Currently, Mexico is in need of 1.1 million engineers, but there are not enough students graduating from engineering programs in the country to begin to fill that need, let alone create a competitive environment for the best and brightest workers. The region overall will need 50 million more jobs over the next 10 years, but much of what is being taught in schools today will not be needed by the business sector by the time students graduate, creating a skills gap that will only exacerbate an already-high youth unemployment problem.
Governments recognize the need for change. For example, Mexican President Enrique Peña Nieto announced at the meeting a new constitutional amendment in his country to prioritize education, the purpose of which “is to make sure that education in the coming years will be of higher quality, and will lead to capacity building of our human resources.” Panama, according to President Ricardo Martinelli, has asked the business sector to participate more in policymaking and accountability measures, and as a result, the country is seeing initiatives in education where teachers are trained in the latest technologies by Microsoft and IBM.
In fact, it is this intersection of public-private partnerships where entrepreneurship has so much potential. Currently, 60 percent of employment in Latin America is through microenterprises, with limited ability to grow; however, many of the microenterprises are caught in the informal sector, separating them from access to institutions that could provide them with leverage for growth. What is needed is an education on business and entrepreneurship in schools—not only to help grow the economy at a local level, but also to catalyze innovative and entrepreneurial thinking in students. This, in turn, creates an ongoing cycle of innovation, experimentation, and risk-taking.
Never has this been easier to do than today, as the global technology revolution creates ever-more ways to democratize access to information, data, and resources. But this is all dependent on internet access. According to the World Economic Forum’s 2012-2013 Global Competitiveness Report, Latin America has one of the lowest rates of information and communication technology (ICT) connectivity in the world. The region suffers from low levels of infrastructure development in general (including roads, airports, and rail lines), but in an interconnected world, access to the internet and mobile devices is more important than ever.
Increased ICT infrastructure and cross-sector communications can help address the trust gap between citizens and their governments, increasing stability; provide new economic opportunities, increasing innovation and growth while lowering the cost of doing business; and can create an environment that fosters entrepreneurship. But there must be solid public-private partnerships established and dedicated to connecting even the most remote and isolated village.
“It is not just one reform in principle,” Professor Klaus Schwab, Executive Chairman of the World Economic Forum, said in the meeting’s opening plenary. “It [takes] a complete societal and institutional reform to prepare a country for the future.”
In agreement with Professor Schwab’s statement, President Martinelli called for action. “Latin America is no longer a mere spectator. Latin America is now a player.” The region has the potential and the ability, if it can only find the courage to fail at some points along the road to success.
Photo copyright World Economic Forum/Benedikt von Loebell.
