Empowering Entrepreneurs: A New Pillar of U.S. Foreign Policy
Steven R. Koltai, senior adviser for entrepreneurship at the U.S. State Department, acknowledges Global Entrepreneurship Week with this essay about the role of entrepreneurship in U.S. foreign policy.
Washington — The ancient proverb, often attributed to Lao Tzu, tells us that when you give a man a fish, you feed him for a day, but when you teach him to fish, you feed him for a lifetime. While rarely cited as the foundation for foreign policy, these common-sense words capture the spirit of President Obama’s belief in entrepreneurship as a core component of American efforts to advance economic development around the world. This focus is especially timely as millions around the world observe Global Entrepreneurship Week, during the week of November 15, and as the United States celebrates the launch of the Global Entrepreneurship Program in Jakarta with one of our fastest-growing trading partners, Indonesia.
The new emphasis on entrepreneurship stems from a long-held American belief in the power of individuals and their ideas. Entrepreneurs, and the new businesses they create, are the engines of economic growth and job creation, which, in turn, are the underpinnings of stability and opportunity. Applied to an international context, as Secretary of State Hillary Clinton has explained, it’s an approach “based on investment, not aid; on supporting local leadership and ideas rather than imposing our own.”
In the spirit of fulfilling a pledge that President Obama made in Cairo in June 2009, the administration aims to spark a cooperative international effort by governments, nongovernmental organization (NGOs) and private sector participants to improve the environment necessary to allow entrepreneurs to flourish. This past April, the president hosted the first-ever Presidential Summit on Entrepreneurship, gathering 250 entrepreneurs from 55 countries in Washington. One of the delegates to this Presidential Summit on Entrepreneurship likened the experience to “getting an MBA from the best university in the world.” The summit has sparked many follow-up conferences, and Turkish Prime Minister Recep Tayyip Erdogan will host the next global entrepreneurship summit in Turkey in 2011.
The administration’s international entrepreneurship effort is being led by the State Department, through the Global Entrepreneurship Program (GEP). This program, announced by Secretary Clinton in her concluding remarks at the Presidential Summit on Entrepreneurship, harnesses a variety of tools and instruments that support and empower potentially high-impact entrepreneurs overseas. The GEP catalyzes, coordinates and consults with private partners and government agencies in the United States and in the target countries.
The six areas of focus will be to identify, train, connect and facilitate funding for entrepreneurs, as it works to provide better support in the public policy sector, and publicly celebrates their successes. In each of these areas, GEP aims to generate partnerships that expand what is already being done. For example, to find many new entrepreneurs, one partner may run a competition for business plan ideas while another provides training to aspiring entrepreneurs to improve their chance of attracting funding. Both programs will be strengthened through the coordination of their efforts.
Some GEP program areas bring new tools to emerging markets, like angel investing. According to the Angel Capital Association, angels account for 90 percent of the outside equity in start-up firms. In contrast, less than 20 percent of start-ups receive traditional venture capital backing.
The GEP initiative is extending this model from the United States by helping to start angel investor groups in several of the countries where it is operating.
In some countries, the GEP is driven by Entrepreneurs in Residence (EIR) and local GEP offices. EIRs will help to coordinate and expand partner programs on the ground and also act as role model mentors based on their business experience both in the United States and in their host country. While EIRs have long existed in venture capital firms and universities, they are new in the world of international economic development.
GEP partners are drawn from five key sectors: NGOs (many are members of the Aspen Network of Development Entrepreneurs, or ANDE), corporations (including some that are part of the Partners for a New Beginning), colleges and universities, foundations, and financial institutions (especially private equity, venture capital and other investment capital firms). These partners will work with U.S. agencies — especially the U.S. Agency for International Development, the Overseas Private Investment Corporation and the Millennium Challenge Corporation — along with key institutions in the target countries. This new methodology is a dramatic departure from approaches taken in the past, engaging the private sector in a leading and innovative way.
Supporting entrepreneurship not only helps emerging economies where we work, but it is good for American businesses and investors. It develops new customers in new markets and allows U.S. investors to participate in the growth of these countries.
As President Obama put it, nurturing entrepreneurship is about helping individuals “take a chance on a dream — taking an idea that starts around a kitchen table or in a garage, and turning it into a new business and even new industries that can change the world.” The administration’s focus on promoting entrepreneurship, spearheaded by the Global Entrepreneurship Program, is a bold new effort we expect to become a permanent part of American foreign economic and development policy.
Steven R. Koltai can be reached at email@example.com.
(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)