Government and Entrepreneurship

Poverty is an issue affecting all the countries in the world despite their social or economic status. However, the level of poverty is varied from one country depending on the economic status. As explored by Boudreaux (2010), most countries have devised strategies for elimination of poverty. In this modern day where people are always worried about their job, housing and the futures of their children, the United States has been lucky to be spared from abject poverty as is the case in third world countries. In a country like Kenya, there are people living under a dollar a day scrapping through life in order to meet their basic needs. Some of the basic needs as we know them are termed as luxuries in such countries.

Approximately ten years ago, the top government leaders held a meeting at the United Nations and pledged to cut the number of people living below poverty line by half in 2015 (Boudreaux, 2010). These are one of the millennium development goals that some of these countries have been working on. The good news is that plans made to eradicate poverty especially in eastern as well as south eastern Asia have been progressive.

It is widely known that entrepreneurship is a major contribution to poverty reduction because it generates new ideas and growth of the economy. It also leads to freedom of the people who live at the mercy of the rich since it encourages investment. On the contrary, many countries across the world have not recognized the meaning and the role of entrepreneurship in the economy. Such countries have no idea that successful entrepreneurship sufficiently identifies the inefficiencies and the waste patterns of the available resources (Kirzner and Sautet, 2006). These countries have devised policies that hinder the creativity and dynamism of the people. These policies weaken the conditions and atmosphere for entrepreneurial activities among the citizens of these countries. In Africa, for instance, there are legal barriers that hinder entrepreneurship.

There are trade unions that make policies that hinder the generation of new ideas from creative minds by use of State power. One of such policies is that in the event that a given company does not make profits over a certain period of time, then that company is given away or becomes a Government’s property instead of being privatized in an open auction. In most cases, these companies incur heavy losses and many employees lose their jobs. In the post communist Russia, for instance, the whole modernization of the private sector is taking place and there is no growth in investment. Many owners of companies are simply utilizing the available scarce resources for their personal gains and not focusing on entrepreneurship as a tool of improving the status of the economy. They are more concerned with their own spheres of satisfaction and not making profits. These people in most cases have strong political affiliations and connections to the State power.

The Russian case also clearly indicates that the legal processes are marred by corruption in terms of licensing acquisition, business registration among other challenges. This limits the spirit of competition which is very essential in entrepreneurship. A company in a free competition increases the sales volumes and in essence grow large in terms of profit maximization as well as compete with international companies and maintain superior standards (Norberg, 2008).

There are poor environment policies put in place by Countries across the world that have affected entrepreneurship directly. In the developing countries, there are no clear policies regarding the emission of poisonous gas from various industries. This leads to massive air pollution and millions of people die prematurely. This, in essence, limits fresh entrepreneurial ideas and opportunities for fear of facing legal charges from the State power.

According to Boudreaux (2010), various Governments also make it difficult for ambitious citizens to invest and create entrepreneurial ideas into the business world. This is because their personal safety in not guaranteed. These people cannot count on their sources of income for their entire survival. This blocks the cultivation, dissemination and generation of new of entrepreneurial skills to be put to practice. Denying these people entrepreneurship opportunities means blocking them from accessing the key to poverty eradication.

There are a lot of political instabilities in the developing countries that hinder foreign investors from exploring business opportunities. Political instabilities are brought about by civil wars and disputed elections results especially in the third world countries. This, in essence, creates distrust among local and foreign entrepreneurs in the sense they cannot risk establishing their premise in such countries. This in turn leads to massive job losses among the local citizens.

Several governments also have no clear and defined policies regarding importation of goods. There are a lot of smuggling of goods and illegal businesses on imported goods especially in the third world countries. These goods are sold at very cheap prices that attract the local consumers. In some instances, the duties charged on the imports are so low that they encourage massive imports. This affects the local manufacturers negatively since they experience poor sales hence hindering entrepreneurship in these countries.

Most institutions owned and run by the Governments do not emphasize on entrepreneurship as an essential tool for survival. Other courses and trainings are considered superior than entrepreneurship. In the third world countries, for instance, it is believed that some careers are more lucrative and prestigious than others. As a result, most young and fresh citizens ignore entrepreneurship. Since some of these citizens have such brilliant skills, such skills and talents go unexploited.

Poor and inadequate technology has adversely affected entrepreneurship in the third world countries. In Africa, for instance, there is poor technology in terms infrastructure that directly affect entrepreneurship. There are poor transport and communication networks, poor and inadequate marketing strategies of the goods leading to low sales volumes, modern machinery to improve the quality of goods among other challenges. All these challenges negatively affect the consumers’ choices hence they go for imported goods which they consider are of high quality due to improved technology in the Western world.

Most governments make it hard for its citizens to establish businesses and run them in that specific country. The taxes levied and the documentation required before one can put up a small scale business is a matter that raises eyebrows (Hazlitt, 1952). The government becomes very eager to make money out of the entrepreneurial ideas of its citizens. In addition, heavy taxes are also levied as one continues to do business making it hard for them to maximize their profits. These conditions make it unfavourable for many to put their entrepreneurial ideas into practise. On the other hand, World Bank and Pricewaterhouse Coopers in the article “Paying Taxes 2011: The Global Picture” have discovered that most economies can measure their success by the taxation paid by different companies. Therefore, most countries have made it easy for their domestic companies to pay taxes which in turn enhance economic growth.

According to Lee (2000) most governments evaluate their success by how many jobs they have created. The president is proud to point out the number of jobs created during their tenure to show how successful they are. Getting a job is the goal of many students when they pass out from college. They are not encouraged to be innovative and establish their own businesses, but are encouraged to get jobs which come with security of being paid a monthly salary. Some of these jobs are exploitive in that the ideas of the employees are fully utilized having them work round the clock with very little pay. After a while, one becomes attached to the culture of being employed because this is what the government together with the society see fit. During the period of employment, one’s creativity is compromised and is not able to establish a business. Due to the harsh economic conditions, quitting the job market to risk self employment is not an option for many and that is why most people find themselves in poverty after their retirement depending on the their retirement funds which are not enough to establish a business at the moment.

In conclusion, abject poverty is not a condition that is here to stay. It can be reduced or better yet completely eradicated. One of the methods that will aid in the elimination of poverty is the promotion of entrepreneurial skills among the citizens of a country. An example is China which has thrived in its entrepreneurial skills even with the presence of an oppressive government (Gonzalez, 2006). India has also become one of the largest economies in the world due to the promotion of entrepreneurial skills (Mitra, 2006). They take pride in being one of the largest centres for information technology. This was all made possible by policies made by the government to ease up on the restrictions of entrepreneurship. Most governments have been known to hinder entrepreneurship because of the policies put in place. They discourage the citizens especially those interested in establishing small scale business. The small businesses also suffer stiff competition from the importation of other products that are sold at a cheaper price.

Most governments have also encouraged students passing out from college to seek employment. In the measure of success, the government will take pride in the number of jobs created during its tenure which is a discouragement to entrepreneurship. For most countries especially those in the third world country to make progress in the elimination of poverty, entrepreneurship has to be encouraged among the citizens.

Reference

Boudreaux, C. (2010). “Home Grown Hope: Small Steps to Ending Poverty.” Deseret News. October 17, 2010. HYPERLINK “http://www.deseretnews.com/article/700073976/Home-grown-hope-Small-steps-to-ending-poverty.html?pg=2” http://www.deseretnews.com/article/700073976/Home-grown-hope-Small-steps-to-ending-poverty.html?pg=2

Gonzalez, M. (2006). Informal Finance: Encouraging the Entrepreneurial Spirit in. Post-Mao China. Index of Economic Freedom. HYPERLINK “www.heritage.org/INDEX/PDF/2006/Index2006_chapter4.pdf” www.heritage.org/INDEX/PDF/2006/Index2006_chapter4.pdf

Hazlitt, H. (1952). Economics in one Lesson. New York: The Foundation for Economic Education, Inc.

Kirzner, M. & Sautet, F. (2006). “The Nature and Role of Entrepreneurship in Markets: Implications for Policy.” Mercatus Policy Series. June 2006.

Lee, D. (2000). “Creating Jobs vs. Creating Wealth” The Freeman Online. January 2000, vol 50:1

Mitra, B. (2006). Grassroots Capitalism Thrives in India. Index of Economic Freedom. HYPERLINK “www.heritage.org/Index/PDF/2006/Index2006_chapter3.pdf” www.heritage.org/Index/PDF/2006/Index2006_chapter3.pdf

Norberg, J. (2008). In Defence of Global Capitalism. Nigeria: Africa Liberty.org.

World Bank Group and PricewaterhouseCoopers. (2010) “Paying Taxes 2011: The Global Picture.” November 8, 2010. HYPERLINK “http://www.doingbusiness.org/reports/special-reports/paying-taxes-2011” http://www.doingbusiness.org/reports/special-reports/paying-taxes-2011