The MBM Institute had a great visit last week from Karol Boudreaux, who was kind enough to drop in from Washington DC and guest lecture my Sustainable Economic Development course at Wichita State. Karol is the Lead Researcher for Enterprise Africa!, which is a research project exploring entrepreneurial solutions to poverty in Africa. Karol was also recently named to the Working Group on Property Rights for the U.N.’s Commission on Legal Empowerment for the Poor.
While good books and stimulating lectures should always be appreciated, there is nothing like hearing a good economics talk from someone like Karol – a researcher who spends a lot of time on the ground in Africa. Her work reminds us that people are naturally entrepreneurial, but that the magnitude of their success often depends upon the reliability of institutions around them. True, entrepreneurs can succeed in the most hostile environments, but difference between an African Sam Walton building an African Wal-Mart or merely running the most successful spaza shop (a sort of shack/general store) in Soweto depends on a rule of law that is predictable and non-predatory. Karol’s talk reminded me of Rosenberg & Birdzell’s book, How the West Grew Rich, which hypothesized that we owe our prosperity to a gradual relaxing of the impediments to entrepreneurship and the formation of reliable rules of law. The African entrepreneurs are there, but a hostile institutional environment often forces them into the “informal” economy, which increases transaction costs and narrows their range of success.
Whether it is a firm or an entire continent, the entrepreneurs within cannot reach their full potential unless there is an institutional environment that (1) does not try and crush them, and (2) allows them reliable expectations and rewards. Thanks again to Karol for visiting and for doing such important work.
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