PSD Blog - The World Bank Group

The Curious Indian Entrepreneur

I attended a session from yesterday's Entrepreneurship and Growth Conference on "Indian Entrepreneurial Success in the United States, Canada, and the United Kingdom". RAND corporation's Krishna B Kumar attempted to explain the extraordinary successes of Indian expatriate entrepreneurs in these three countries, arguing that much can be attributed to observable differences such as education, family ties, and choice of sector.

In the United States, the typical Indian entrepreneur has an average business income that is substantially higher than the national average and is higher than any other immigrant group. Net annual income in the United States is 60 percent higher than the overall average. Meanwhile, in Canada and the UK, Indian entrepreneurs make similar incomes as other immigrants, but employ more employees than almost any other ethnic group.

What explains these differences? The authors attribute around 50 percent of this success to higher rates of education. For example, in the United States 68 percent of Indians have college degrees, which is twice the rate for whites. This is also true for Canada, where immigrants are largely admitted on a points based system that rewards higher education.

IFC doubles down on India, entrepreneurship

IFC chief executive Lars Thunell is in Delhi this week, attending the World Economic Forum's India Economic Summit. Thunell is looking to boost the IFC's capital base by $2.4bn, much of which will be dedicated to the world's poorest countries and regions, including India. 

India has surpassed Russia as IFC's largest investment portfolio. The FT explains this trend:

The IFC decision to increase India's exposure, which was worth $3.4bn last year or 10 per cent of its global portfolio, comes as it is trying to boost support for entrepreneurial companies working with the world's poorest people.

"One of the very positive things coming out of the new government here is their high focus on inclusiveness," said Lars Thunell, chief executive officer of IFC, referring to the India's Congress-party-led government, which was re-elected in May. "That's why we are here."

The article notes that India's seven poorest states contain 40 per cent of the national population, yet only attract 1 per cent of the country's FDI.

PSD Blog Welcomes Doing Business!

  

The World Bank's Doing Business blog has migrated to the PSD blogoshere. Dahlia Khalifa, senior member of the Doing Business team explains the transition:

As we continue to experiment with new ways of communicating the key messages of Doing Business, we have decided to consolidate our efforts and combine with the World Bank Group's Private Sector Development blog. You'll be able to find new content from the Doing Business team under a new "Doing Business" category on the Private Sector Development. We hope to see you over there, and look forward to your hearing your thoughts through the comments function!

Next week, Crisis Talk will be joining us. Stay tuned.

Sometimes simple really is best

Editor's Note: Alan Johnson is a Senior Private Sector Advisor in the World Bank's Investment Climate Advisory Services Group

I’m always interested in situations where tools that are aimed at developing countries are applied to their high income counterparts. A recent post in the New York Times’ small business blog provides an excellent example. The author, Scott Shane, refers to the 2008 World Bank Group Entrepreneurship Survey, which gathers internationally comparable data on business creation, and applies it to the United States.

The results of the survey show that, after accounting for differences in per capita income, countries with easier and less expensive procedures for registering new businesses have higher rates of new business creation. This conclusion is reached by examining the relationship between the number of new business registrations (entry rate density) and the “ease of starting a business” indicator in the Doing Business report.

China's revolution in access to finance

China looks set to see a boom in access to finance since the passage in 2007 of the Property Rights Law. Last week, the Financial Times reported on the newfound ability of farmers to monetise their land. Some farmers are selling to larger, more efficient companies, while others are taking advantage of the opportunity to use their land as collateral:

...the application of a monetary value to land usage rights is creating fertile ground for the spread of financial services to the poorest. Most farmers have never had access to loans but Beijing is backing a flurry of initiatives to change this. To dramatise the point, Wen Jiabao, the premier, recently had an impromptu, televised chat with a somewhat startled, straw-hatted, 67-year-old farmer, Pan Jinmu, who had walked into his local bank in Zhejiang province to get a Rmb5,000 ($732, €499, £461) unsecured loan.