Economic Welfare and Entrepreneurship

By Dawood Mamoon

The book sets an agenda for economic prosperity within nation states. The proximate causes of Economic Development range from proximity of countries to international markets to sectoral development within domestic economies where Industry should take a central role, An early emphasis on industrial development was an outcome of wage inequalities particularly in manufacturing sector favoring skilled labor. However not only that manufacturing pays are not fair towards unskilled labor, in most of the developing countries manufacturing doesn't represent value addition and vertical development where technology is adopted with the exception of China, India and East Asia in the developing South. To get best returns from international trade, in addition to financial development, there needs to be an environment that promotes innovation and creativity. Democratic values address this challenge and additionally a culture of entrepreneurship develops technology products indigenously that are beneficial to both economy and society. Thereby, this book discusses the importance of social entrepreneurship at length drawing attention to the latest initiatives at Harvard Business School (HBS) where the author has been directly part of one particular initiative by Professor Michael Porter namely Economics of Shared Values. Shared Values work in a macro environment that promotes not only democracy but peace within and across national borders of a nation state. Agenda of peace building is particularly discussed by understanding Pakistani economic, political and diplomatic journey within South Asia.

• Language: English
• Publisher: Dawood Mamoon
• Release date: Feb 28, 2024
• ISBN: 9798224967872

Dawood Mamoon

Dawood Mamoon has been Director Office of Research, Innovation and Commercialisation (ORIC) at leading Engineering University of Pakistan namely Ghulam Ishaq Khan Institute (GIK) from 2020 to 2022. He was affiliate of Harvard Business School from 2013 to 2017. He has a PhD in Economics for Sustainable Development from Erasmus University, the Netherlands.

Book preview

Economic Welfare and Entrepreneurship

Dawood Mamoon

Published by Dawood Mamoon, 2024.

While every precaution has been taken in the preparation of this book, the publisher assumes no responsibility for errors or omissions, or for damages resulting from the use of the information contained herein.

ECONOMIC WELFARE AND ENTREPRENEURSHIP

First edition. February 28, 2024.

Copyright © 2024 Dawood Mamoon.

ISBN: 979-8224967872

Written by Dawood Mamoon.

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Table of Contents

Economic Welfare and Entrepreneurship | Agenda Setting for Global Prosperity | by | Dawood Mamoon

Economic Welfare and Entrepreneurship

Agenda Setting for Global Prosperity

by

Dawood Mamoon

The book sets an agenda for economic prosperity within nation states. The proximate causes of Economic Development range from proximity of countries to international markets to sectoral development within domestic economies where Industry should take a central role, An early emphasis on industrial development was an outcome of wage inequalities particularly in manufacturing sector favoring skilled labor. However not only that manufacturing pays are not fair towards unskilled labor, in most of the developing countries manufacturing doesn't represent value addition and vertical development where technology is adopted with the exception of China, India and East Asia in the developing South. To get best returns from international trade, in addition to financial development, there needs to be an environment that promotes innovation and creativity. Democratic values address this challenge and additionally a culture of entrepreneurship  develops technology products indigenously that are beneficial to both economy and society. Thereby, this book discusses the importance of social entrepreneurship at length drawing attention to the latest initiatives at Harvard Business School (HBS) where the author has been directly part of one particular initiative by Professor Michael Porter namely Economics of Shared Values. Shared Values work in a macro environment that promotes not only democracy but peace within and across national borders of a nation state. Agenda of peace building is particularly discussed by understanding Pakistani economic, political and diplomatic journey within South Asia.

1. Rapidly Changing Realities of Global Economy

My expertise are ideally placed in Business Analytic and People Analytic. I am an Economist as I have completed my M.Sc and M.Phil in Economics from Quaid-e-Azam University. After doing these degree programs, I had the opportunity to study and complete my MA and PhD degrees from International Institute of Social Studies (ISS) of Erasmus University, the Netherlands that is one of the prominent development school’s of the world. Though my specialization remained Economics of Sustainable Development, studying at ISS enabled me to have a detailed academic orientation towards issues societies in developing countries face while bench marking economic, social, political, and scientific values that form the basis of modern societies of Europe and the United States of America in more broader terms. My PhD thesis was specifically about finding broader definitions of economic development that surrounds the mainstream applied economics debate. In other words, I tried to investigate the most proximate causes of Sustainable Economic Growth or lack of it thereof among countries. That enabled me to in detail understand diverse economic systems that had lead to economic growth. For example the case of India and China are particular to mention. India has been a thriving democracy with better rule of law where by China has been a better economic growth performer because of its robust state regulations that resulted in a thriving private sector in addition to a dominant foot print of public sector enterprises. So much so that, Chinese and East Asian companies have taken up the path of vertical development where China is competing in international markets with the developed world in technology products. Definitely China has not only been successful in identifying local and international supply chains for its industrial products, it has a well developed services sector and a financial sector. However it is important to mention that as the trade war between US and China has been initiated during and after Trump Presidency, many researchers are claiming that period of hyper globalization that had hugely benefited China and thereby world markets has been over. In other words, China has to renegotiate with its private sector policy that would affect indicators of business competitiveness in China for private sector enterprises. Though Trade war with China has been an outcome of inward economic policy that Biden has eventually adopted for the US through Inflation Reduction Act, trade war is largely sold to public on the premise that China is not a democracy. Now more and more focus towards economic cooperation of the United States is with the democracies in the region including Hong Kong, Taiwan, and more prominently with India. Treasury Secretary Janet Yellen is introducing a friends shoring policy for the US that would develop trade relations with countries that practice common values including democratic values and human rights for its people. Right now countries like Pakistan are considering to benefit from such policies and especially orienting its IT sector. Though China surprised many Economics pundits by having a sustainable growth for decades despite being a communist regime, empowerment of people through freedom and democracy represents one of the most effective means towards a society where innovation can happen as is the standard case with US and Europe. Though state regulation that promotes private enterprise is the hall mark of capitalist economy through promoting private property rights and other forms of regulation that ensure business competitiveness, clearly development of society and people through rights and freedom is no less important. Thereby surprisingly China achieved business competitiveness while focusing more on promoting business competitiveness than bringing more freedom to its population. This debate is very important for most of the developing countries where private enterprise is still a sought after idea in public policy. The best way to achieve greater economic activity and higher economic growth is through promotion of private enterprise as the text book solution of capitalism. But it has been not that straight forward for most of the developing countries including Pakistan. The question remains how innovation and vertical economic development can happen. Clearly government regulation to promote private enterprise is not enough. Even following the Chinese model without understanding the local dynamics of society is futile. There are millions of poor people in developing countries like Pakistan. Then there are unemployed youth. Yes entrepreneurship is the solution. Though through youth policies, the government can arrange for finance for start ups, what are the exogenous factors that prevent or favor start ups. Yes it is important to have policy environment that favors businesses and that includes both domestic policy and policies that represent proximity of domestic economy to international markets.  This includes both trading regimes and diplomatic effort that represents effective policies towards gaining from for example Friends Shoring Policy of Biden government. But apart from public policy, education and degree programs like business analytic can fill the gap that exist between local skills to benefit from trends in international markets. Thereby a strong public and private partnership is needed and academia can complement the effort to develop effective businesses. In addition, there are other definitions in economics that redefine businesses in developing countries  that have significant poor populations. For example social enterprise is a new phenomenon where non economic values like culture takes precedence in economic value creation for the society. The difference between a business enterprise and social enterprise is that business efficiency is usually measured through economic and monetary revenues and profits where as social enterprise defines itself through its impact on society representing variables like health and education. The business model of a social enterprise might be same to a business enterprise to the extent that monetary dividends are necessary for its sustainability. But the product is about social innovation than economic innovation and technology is equal part of both social and economic innovation respectively. When in 2008, I competed my PhD from International Institute of Social Studies (ISS) of Erasmus University with a degree in Development Studies and a specialization in Economics of Sustainable Development, it was a time when a global financial crises and a prolonged economic recession was initiated by failure of sub prime mortgage of American real estate. Over the years, the world economics has fundamentally reshaped itself. For example, the biggest surprise was with the Biden government when it introduced Inflation Reduction Act that is considered to be a protectionist policy against the wisdom of free market economy for the world while the era of hyper globalization that recommended in favor of free international markets was already concluded during Trump Presidency as multi billion dollars of tariffs were imposed on Chinese exports to US. It might not be an exaggeration that Economists were taken by surprise. It would be a long debate why policy has not been adjusted to new realities especially when we consider that countries like Pakistan are still seeking IMF programs with same policy prescriptions. More and more people are talking about the fact that capitalist economics is not working in developing countries. Having written this, the brilliance of Economic Growth to achieve economic development is still true and effective economics. In my PhD thesis I had already investigated the proximate causes and factors of Economic Growth. It is more about sustaining economic growth than having an accounting measurement of prosperity and economic activity for a year. Then there are economic and social inequalities while abject poverty is still a significant reality for most developing countries. Having been to the best development school of the world, I understand that it is easy to get disenchanted from mainstream economics despite the fact it has delivered prosperity to the West. In developing South, China has a precedence of sustainable economic growth and it has become the second largest economy but it is still a middle income country. To become a high income country like in case of US and Europe, average livelihoods of the population needs to improve not only in-terms of monetary definitions but those definitions that make you part of a modern and free world including democracy. Additionally most of the world is not China and it is still under developed with the exception of East Asia. It seems capitalism is ‘THE’ development recipe. Yes, it needs few adjustments. Yes there are new economic understandings in order. The 2008 financial crises had evidently shown that focusing on material values or business profits is important but other definitions of human development, business effectiveness needs to be harnessed further so that they become part of the public policy that is more comprehensive. Literature of Business Competitiveness and Business Leadership already talks about values like trust, compassion and kindness. Though Economics does not. The modern culture that is represented in mainstream economics converts every thing into its monetary worth. However notions like democracy and modern society does talk about social and political empowerment.

1.1. Economic Development vs Economic Progress:

For any country a growth strategy is clearly different from a development policy and if not there need not be an emphasis on pro poor economic growth. Though poverty reduction strategies seem to accept that