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GLOBALOUTLOOK COVERSTORY


PERCEPTIONS OF STARTINGABUSINESS DUE TO THE PANDEMIC VARY ACROSSCOUNTRIES, ASAPERCENTAGE OF TOTAL EARLYENTREPRENEURSHIP ACTIVITY* (TEA)


Source: Global Entrepreneurship Monitor 2020/2021 Global Report * Total early-stage Entrepreneurial Activity (TEA): the percentage of adults aged 18–64 actively engaged in starting or running a new business


ing largely fromdeveloping countries in Asia, which are oftenEnglish- speaking, such as India, the Philippines and others,” she explains. Workers in India are the largest


suppliers of work on digital labour platforms, such as Topcoder, accounting formore than a third of all work completed in 2020, the majority of which was software development, according to ILO data. While software development and


technology are themost sought skills of remote workers on online labour platforms, with its share of total outsourcing increasing from 39%in 2018 to 45% in 2020, the plat- forms are often used for other more menial tasks. Start-ups claiming to be pow-


ered by AI, for instance, often out- source tasks to humans in develop- ing countries, as they develop machine learning programs to auto- mate the process. A 2019 study ofmore than 2800


AI-start-ups in Europe, conducted by London-basedMMCVentures, found that 40%do not, in fact, use any AI. Ms Rani contends that while


tech start-ups can provide opportu- nities for workers in developing countries through these online- based platforms, there is often a lack of social protections and implementation of labour stand- ards for these workers. “It is beneficial to have tech


start-ups for local economies,” she says. “But tech start-ups should keep in mind that what they are creating should be for the welfare


of all and not something that would lead to the worsening of situ- ations for workers.”


Diversificationover tech-focus While somegovernments often put intense focus on promoting and sup- porting start-ups and the tech sector, experts believe amore holistic approach is needed. “At scale, having many entrepre-


neurs makes a huge societal differ- ence,” says Ms Ionescu-Somers. But a focus on technology alone will not suffice. “Societies needmany entrepre-


neurs in all viable sectors,” adds Ms Ionescu-Somers. “Governments need to create the optimal environmental conditions for individuals to start and grow a business.” This sentiment is echoed by Mr


Isenberg,who believes that scaling up businesses of all ages and sectors is far better than putting an overt focus on start-ups and technology. As part of the Babson Entrepreneurship Ecosystem Project (Beep) he set up in 2010, Mr Isenberg has developed methods for using entrepreneurial ecosystems as a tool for regional economic development. One Beep initiative in the city of


Manizales, Colombia, focused on “quick wins”, such as helping exist- ing businesses to grow more rapidly withinmonths, instead of start-ups. This approach has paid off—compa- nies in Manizales that joined the ‘Scalerator’ programme sawan aver- age 55% increase in sales growth


August/Setpember 2021 www.fDiIntelligence.com


within a year of joining andmade 703 new hires.


Positive intent While start-ups and entrepreneur- ship can lead to the creation of eco- nomic and social value, their unin- tended consequences can also have a pernicious effect. And with venture capitalists making increasingly large investments into tech companies, pushing themto scale rapidly at the expense of thecommunities they purport to serve, this phenomenon looks likely to stay. For economic developers looking


to start-ups and entrepreneurial eco- systems to stimulate economic growth and local opportunity, an awareness of this infatuation with tech-enabled businesses—and its pit- falls—will be crucial. For Ms Hayes, the question of


whether tech start-ups and VC are forces for good boils downto whether there is social and environ- mental purpose embedded into their mission from the outset. “If therewasgoodintention, ide-


ally that will manifest inhowthat busi- ness growsandscales,andthe value it creates for other people,” she says.■


AT SCALE,HAVINGMANY ENTREPRENEURS MAKESAHUGE SOCIETAL DIFFERENCE


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