Editorials | April 2007
|Mexico Must Encourage an Entrepreneurial Culture|
Allan Wall - PVNN
The best way for Mexico to fight poverty is to create more and better paying jobs. In order to accomplish this task, Mexico needs entrepreneurs.
An entrepreneur is one who assumes the risk for starting a new business enterprise. At the outset, the entrepreneur does not know whether his venture will succeed or fail. But when it does succeed, it creates more jobs for his fellow citizens, which is what Mexico sorely needs.
If we define entrepreneur as simply anyone who starts a business, then Mexico already has thousands of entrepreneurs. Nevertheless, many of these businesses are under-capitalized and form part of the informal economy, and most don’t hire many employees.
Part of the problem is rich Mexicans don’t need to be entrepreneurs.
And that starts at the top, with the country’s ten billionaires. The wealthiest is Carlos Slim, who recently became the world’s second-richest man (at US$53.1 billion Slim trails #1 Bill Gates by less than a paltry US$4 billion). Yet Slim has only created a quarter of a million jobs for his fellow Mexicans, which is pretty pathetic (in contrast, Wal-Mart employs 1.7 million Mexicans).
Much of the wealth at Mexico’s Pinnacle of Plutocracy is acquired and maintained not by sound business practices, but by monopolies and crony capitalism.
There are some great companies in Mexico, which were founded by entrepreneurs. Enterprises built up from scratch by hard-working individuals. But after striking it rich, family businesses often get comfortable and lose their edge. To put it in generational terms, the sons and grandsons get a little lazier than the hard-working old man who founded the company.
Prevalent on the Mexican social landscape are the “juniors,” as Mexicans colloquially refer to spoiled young rich men. A “junior” isn’t interested in being an entrepreneur, since he depends on daddy’s wealth and connections to be successful and get out of trouble if need be.
Nor are the many Mexicans who depend on secure government jobs (sinecures) interested in entrepreneurship. Why would they be? They’ve got their secure government jobs. Nor, obviously, do union leaders, since being a union chief in Mexico is a highly lucrative post.
In short, the very people who need entrepreneurship are those who can least afford it.
Recent research at several Mexican universities indicates the low esteem in which entrepreneurship is held.
According to a study by researchers at the Universidad Panamericana, and the Autonomous University of the State of Puebla, only 1-3 percent of university students are interested in starting their own businesses.
A study from the National Autonomous University of Mexico (UNAM) says that 80 percent of new businesses established in Mexico fail within two years. Well, nobody said it wasn’t a risk to start a new business.
It seems that most Mexicans who turn to entrepreneurship do so only as a last resort.
But what if entrepreneurship were held in higher esteem in Mexican society? How could Mexico nourish a culture of entrepreneurship?
On the legal side, red tape and hurdles impeding the establishment of business enterprises should be reduced. These kinds of hurdles encourage dependence on political connections and bribery rather than commercial creativity.
The Peruvian economist Hernando de Soto has emphasized the importance of secure property rights in the creation of wealth. Mexico’s slipshod property law needs real reform.
Mexico’s business colleges have their part to play. In recent years such institutions have incorporated entrepreneurial projects into their curriculums. But so far the results haven’t been very impressive. The students engage in these projects for a grade, and they seldom become real businesspersons. Universities need to find more ways to expose students to entrepreneurial options, and to get them out into the local business community.
The churches of Mexico, both Catholic and Protestant, can encourage entrepreneurialism. Certainly clergymen should speak out against unethical business practices — product misrepresentation, employee mistreatment, embezzlement, pilfering, bribes, kickbacks, etc. However, both the Catholic and Protestant clergy should extol the benefits of entrepreneurs who create jobs to Mexican society. Business should be held up as a vocation, as a Christian service to God and man. Such a mindset could make a real difference.
Mexico has the human resources for an entrepreneurial revolution that could benefit its people. What’s needed is a change of mentality. The government, the academic world, the churches, civil society and families all have a part to play in encouraging this. Its effects would be highly advantageous to Mexico and its future.
Allan Wall is an American citizen who has been teaching English in Mexico since 1991, and writing articles about various aspects of Mexico and Mexican society for the past decade. Some of these articles are about Mexico's political scene, history and culture, tourism, and Mexican emigration as viewed from south of the border, which you can read on his website at AllanWall.net.
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