I chose from hundreds of sessions on the opening day of the 41st annual World Economic Forum at Davos, a five day whirl of meetings and entertainment with some 2,500 participants, including heads of governments, CEOs, academics, and artists. Topics range from the New Economic Reality, Insights on China, and the Future of Employment, to Music for Social Change, the Power of film to Revitalize Culture, Economics, and Hope, and Bollywood extravaganzas.
I went to the Role of Business in Development session, moderated by Linda Rottenberg, Co-Founder and CEO of Endeavor, a non-profit mentor-capital fund which identifies and helps budding entrepreneurs (featured in our 2009 Index of Global Philanthropy and Remittances) While it seemed fairly straightforward to me what the role of business was in development, i.e. create jobs, wealth and prosperity, thus empowering individuals with the freedom to choose their livelihoods and lifestyles, I wanted to hear what the dynamic entrepreneurs on this panel had to say.
First, I never heard the words developing country. Panelist, Alexander Izosimov, President and CEO of VimpelCom which invests in global telecommunications, thinks even the term emerging economy may become obsolete soon. Despite the extreme poverty in primarily African countries, growth rates and entrepreneurship are increasing even there. Izosimov points to hungry telecom start ups in Africa and Egypt whose relentless drive for efficiency is making them more competitive with products from debt-strapped and aging developed countries. Sunil Bharti Mittal, Chairman and Group CEO of Bharti Enterprises, whose company adds 10 million new phone subscribers each month, pointed to the promise of mobile phones as mobile banks in India. With 600 million Indians outside the financial markets, 400 million of these have mobile phones which can be used as banks. Paul Fletcher, Senior Partner in Actis, a U.K. investment firm, while still thinking that the term emerging markets made sense, cited new figures of $908 billion being invested in these markets. In Africa alone, private capital has increased tenfold over the last decade.
Rottenberg pointed out that over 10 years ago, development types were pooh-poohing entrepreneurship in poor countries, saying there were no entrepreneurs, no investors, and, after all, what did do entrepreneurship have to do with development? She asked all the panelists what the secret sauce was for the high economic and entrepreneurship growth rates over this same decade. Mittal, pointing to Indias entrepreneurship in past centuries, said it took getting out of socialism before India could take off again. President of Panama panelist, Ricardo Martinelli, a former businessman who has appointed 7 CEOs to his cabinet, emphatically said that it was changing the regulations and laws in Panama with the help of people who had experience in the private sector. Only this finally changed the system for growth to take off. Lest you think President Martinelli is an out of control capitalist de-regulator, his country now offers free internet to everyone, subsidized education, and allows children and spouses of foreign workers to work in Panama.
Throwing a splash of cold water on these happy panelists, Tim Wirth, President of the UN Foundation, financed by Ted Turner in 1998, pointed to todays lead news story on the growing income inequality among the super-rich and everyone else. How were entrepreneurs going to fix this? How do we get the fundamental social change in good governance to bring about systematic and lasting reforms in countries, he queried? Mittal pointed out that while the rich are getting richer, this doesn't mean that the poor are getting poorer. Theyre just not getting richer fast enough! Other answers ranged from having governments focus on education, infrastructure, and anti-corruption. Most felt that it was important to encourage younger people with private sector experience to go into public service for at least some time.
I came away encouraged as I always do when we look at developing countries as glasses half full, with local talent and opportunities for growth and prosperity. One of the most encouraging things are how the definitions of emerging economies are changing. The term BRIC was coined by Jim ONeil in 2001. It stood for Brazil, Russia, India, and China, nations starting to grow themselves out of poverty. The new term and youre hearing it live from Davos adds Mexico, Indonesia, Turkey and South Korea to give us the MITBRICS! So, some things do change. In case youre wondering, all the countries excluded from MITBRICS are now dubbed The Cement Group, as the new substitute term for developing and emerging economies, I guess.