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The Small Business Association of Barbados had the opportunity recently to sit down with economist Professor Justin Robinson to discuss the nagging question: What are the characteristics of an entrepreneurial economy? This was part of the FLOW Business ‘Inknowvation’ Masterclass, held last Friday, which focused on the digitalisation of business for a modern Barbados.
A key component of this event for the SBA was entrepreneurship management and, more so, what an entrepreneurial economy looks like. For some time, this question has engaged policy makers, academia, business administrators, and small business owners. The simple reason is that despite the myriad of research conducted addressing the hypothesis that small businesses are the engine of growth for economies, the lived reality on the ground in Barbados is that it is simply too challenging to enter the business market and to sustain an enterprise in the local environment. This is particularly acute for small firms.
Aspects of the ecosystem, as popularized by Babson Global, are evident in the Barbadian context, namely – policy, human capital, and support. However, the country is not punching above its weight in fostering an entrepreneurial culture, providing adequate financial resources and improving business facilitation to help firms grow their markets or access new ones.
Prof Robinson posited Barbados is in need of economic invigoration, “building out the entrepreneurial economy (is) critical to providing that invigoration to maintain the historic gains and address emerging challenges and opportunities”. Robinson pointed out that the entrepreneurship economy requires us to move beyond needs-based replicate entrepreneurship to include opportunity and innovation-based entrepreneurship that is founded on human capital, economic policy credibility, and a supportive regime fostering the full spectrum of the entrepreneurial ecosystem.
Robinson added that if in fact there is an influential group within the society who does very well in the status quo and can use their influence to really maintain the status quo, then we are going to have a major challenge in building out an entrepreneurial economy. “An entrepreneurial economy requires a policy environment that is good for business, as distinct from one that is good for some businesspersons.”
Whereas macroeconomic stability and capital projects are necessary, this is not sufficient. Public policy must actively support a national innovation system. Government can create the environment for entrepreneurial activity; continued public discourse can encourage the state to facilitate that empowering environment.
Prof Robinson argues that the country needs to get out of the middle-income trap, which always focuses on macro-economic stability. While this approach is necessary, it is not sufficient. Driving growth through construction build-out is a credible strategy, but it has a finite life. The question to be asked is – what keeps the economy growing outside the end of these macroeconomic projects? The answer is innovation.
Unfortunately, according to statistics, the environment for fostering entrepreneurial activity in Barbados is not world class. A look at the growth of real GDP among several CARIFORUM countries, in addition to Singapore and Mauritius, showed Barbados at the bottom of the table. Singapore led the list of countries with cumulative growth of 248 per cent over the 40-year period of assessment.
In the Caribbean, the numbers told the story: St Kitts – 152 per cent, Antigua – 129 per cent, St Vincent – 121 per cent, Grenada – 115 per cent, Dominica – 96 per cent, Trinidad and Tobago – 92 per cent, The Bahamas – 63 per cent, Jamaica – 45 per cent, and Barbados – 22 per cent.
The more disturbing fact about this analysis, according to Prof Robinson, is not ¾ of Barbados’ growth was the period up to 1974. That means that the country has not really grown over the last four decades.
We do appreciate that building an entrepreneurial economy is a challenging undertaking, and the tolerance for disruption is also challenging. Disruption – a changing of the guard, new entities emerging at the expense of old entities – is a critical feature of an entrepreneurial economy. If there is limited tolerance for disruption in the economy, that in itself is a constraint. Entrepreneurs must be allowed to fail, develop new and innovative products, wind-up operations where there is little or no growth for a product offering and reenter the market with new or improved concepts. The cycle of product development, growth, decline, and reemergence is a critical part of the entrepreneurial experience. This cycle must be enabled by a system of supports, finance, culture, etc., as proffered by Babson Global.
An enabling environment which allows entrepreneurs to thrive is a critical pillar, since it is impossible to build an entrepreneurial economy if stakeholders are frustrated with the time it takes to complete routine business transactions. The time it takes to move from idea to product to market presents a credible impediment. Innovation is critical to productivity gains, and productivity is driven by innovation. Ideas must be turned into products, which in turn generate wealth.
Other barriers include the cost of available financial resources and access to direct public funding. The implementation of progressive government policies is therefore imperative to support innovation and the emergence of an entrepreneurial economy.
The Small Business Association of Barbados (SBA) is the island’s non-profit representative body for micro, small and medium enterprises (MSMEs). Connect with the SBA: https://www.sba.bb/sba/