NDE-news: May 21 - 27, 2007

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May 21 - May 27, 2007

Ask someone to think of life 100 years ago and how it was different from life today. You will hear about the invention of the automobile, radio, television, internet and countless other everyday items that we all take for granted. What you aren't likely to hear is about the economic growth that helped bring those items into every American household. A new book (being formally released tomorrow) by three prominent economists that helps us all understand, taking a close look at the forces driving that growth and how it can provide a lesson to aspiring nations seeking higher standards of living for their citizens. Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity examines the advantages and pitfalls of four different types of capitalism: state-guided capitalism, in which government handpicks particular industries that it expects to be "winners"; oligarchic capitalism, in which the bulk of the power and wealth is held by a small group; big-firm capitalism, in which the most significant economic activities are carried out by established giant enterprises; and, entrepreneurial capitalism, in which a significant role is played by small innovative firms. The authors -- Will Baumol, Robert Litan and Carl Schramm -- point to a blend of the final two as 'Good Capitalism,' mixing the innovation and imagination of entrepreneurs with the resources and infrastructure of established firms to move innovations into the marketplace. Looking to the century ahead, they also illustrate how wealthy economies can keep from backsliding as well as the steps other countries must take to move faster toward the economic frontier.

Learn more about Good Capitalism, Bad Capitalism: the book, its authors and where to find a copy.

Building a Sustainable Movement for Social Entrepreneurship

A new report from the Skoll Foundation and SustainAbility, a social innovation consultancy, examines how social entrepreneurs can be more effective in building sustainable initiatives that will survive over the long haul. Based on surveys and outside research, the report contends that “social entrepreneurship is on a roll,” with the field developing rapidly and starting to have real impact. Yet, the field is still very small (receiving about $200 million in annual investments) and money is a big headache. To survive, social entrepreneurs will need to identify and develop diverse funding sources. Their goal should be creation of a stable funding base to avoid the challenge of surviving from grant to grant. In addition, social entrepreneurs need to devote more attention to government and public policy issues. Social entrepreneurs can develop new and innovative solutions to pressing public problems. But, they will never be able to develop the full scale and capacity to “fix” big problems like fighting poverty or fixing educational systems. These efforts will require close partnerships with larger entities like government and business who can help scale up innovative solutions devised by social entrepreneurs.

Access the 2007 report, Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems, from the Skoll Foundation, SustainAbility, Allianz and DuPont.

Strengthening Venture Capital in Canada

Canada needs a new set of policies to promote and support its venture capital industry, according to a new report from Canada’s CD Howe Institute. The report contends that Canada’s Labor-Sponsored Venture Capital Corporations (LSVCCs), a major Canadian source of equity capital, are too costly to entrepreneurs. They charge high fees and rarely generate positive returns. Because of these problems, Canadian policymakers need to consider alternative policy tools such as reduced taxes on capital gains, less stringent bankruptcy rules, and less onerous securities regulation. The report also urges Canadian policymakers to consider new investment vehicles similar to the US’s Small Business Investment Companies (SBICs) or Australia’s Innovation Investment Funds.

Access the April 2007 CD Howe Institute report, Financing Entrepreneurs: Better Canadian Policy for Venture Capital, by Douglas Cumming.

Ranking Indiana on Innovation

The Indiana Chamber of Commerce has released its annual report card on the Indiana economy and the news remains uninspiring. The state received a “C” grade this year, reflecting Indiana’s continued lagging performance in areas of entrepreneurial dynamism, productivity improvements, and research capacity. Since the report card effort began seven years ago, Indiana’s performance has improved in numerous areas. But, other states have also improved. As a result, Indiana’s performance falls in the middle range when compared to all 50 states. Its performance is fairly similar to neighboring Midwestern states of Ohio and Illinois (C grades), and Michigan (C+) with neighboring Kentucky further behind (D). Only Utah, Massachusetts and Maryland receive overall ‘A’ grades on this scorecard. Even if you are not interested in a detailed analysis of Indiana’s economy, this study is worth a look because it contains valuable data and analyses that compare Indiana to all fifty states.

Access the May 2007 Economic Vision 2010 Report Card, from the Indiana Chamber of Commerce.

Cleaning up Contracting

Government contracting is big business -- not only for the industrial behemoths like Boeing and Lockheed Martin, but also for thousands of small business owners located across the US. Yet, in recent years, it has become more difficult for many small firms to break into the government marketplace. A new report from the Center for American Progress, a progressive think tank, contends that cronyism and corruption have played a big role in these trends. Last week, the Center held a conference and released several reports on this topic. The Center’s report notes that federal contract dollars grew by 86% between 2000 and 2005 (reaching $377 billion). The scale of non-competitive contracts doubled over that same period. The report recommends closer oversight of the contracting process as well as hiring of additional contract personnel to better monitor contractor performance.

Learn more about the Center for American Progress initiative on competitive contracting and read the May 2007 report, A Return to Competitive Contracting, by Scott Lilly.

Who Uses Information Technology?

Is the Internet over-rated? It appears to be for about 49% of Americans who report that they rarely or never use computers, cell phones, or other information and communications technology (ICT) tools. This finding comes from a Pew Internet and American Life Survey of ICT use. The report identifies ten categories of ICT users. The elite users (about 31% of American adults) frequently use the internet, cell phones and other products. Not surprisingly, the 49% of non-users or indifferent/inexperienced users tend to be older, less well educated, and with lower incomes. A good portion of this group is satisfied with the status quo and did not express a strong desire to be more connected. These findings could have implications for ICT businesses as their optimistic projections for future customer growth may need to be tempered.

Access the 2007 Pew Internet and American Life report, A Typology of Information and Communication Technology Users, by John B. Horrigan.

Corrections:
In last week's issue, two links did not operate properly. The Defense Venture Catalyst Initiative (DeVenCI) can be found at http://devenci.dtic.mil/ and the Measuring Intangibles report from the Athena Alliance can be found at http://www.athenaalliance.org/apapers/MeasuringIntangibles.htm.

The National Dialogue on Entrepreneurship is an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving entrepreneurship around the world. Subscribe now to receive your weekly copy. Archived issues are available online.

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All stories © 2007 The Public Forum Institute
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