Jorge U. SaguinsinAteneo Graduate School of Business

Government Entrepreneurship

Government Entrepreneurship

The new challenge to politics and governance

Seems to be a contradiction; will

government entry into entrepreneurship produce

results?

Governments fare poorly as business managers! (governed by outdated

administrative code books)

A PHL GOCC - Napocor – losing billions – even millions by the hour!

Look at flag carriers and state run businesses – disincentive and unfair competition to private

sector

Central planning in USSR and China

USSR Central Planning of Economy – it failed!

Central Planning

Characterized by huge losses, government

subsidies, and decline in productivity

Government’s roles are to:

• Regulate• Provide policy direction• Provide the ecosystem

conducive to entrepreneurship

Collective farming in Russia caused decline in farm productivity

China’s state run businesses

Is China’s foray into global business good or bad?

Chinese government investment is a driving force in its economic

global dominance

China’s central banks and its investments in business

Government Centers of Excellence

There are bright young passionate technocrats who run their units well;

and are world class

Examples of successful government entrepreneurship:

• Malaysia• Singapore• Taiwan• New York City EDC• Reagan and Bob Clinton

regime in US

Singapore – Century 21 campaign led by Koh Bon

Wee – overseer of Singapore Telecom, Singapore Airlines

and Development Bank of Singapore

“I think that the government’s recognition that more

entrepreneurship is needed for the continued development of the

economy is good..” xxx … for your development then, your relevance depends on whether you are more creative and more innovative” - Koh

Malaysia – Mustapa Mohamed, Minister of

Entrepreneurial Development

“We were charged with promoting entrepreneurship throughout the country. But neither I nor my senior staff

had any idea what entrepreneurship was” -

Mustapa

Taiwan - K. T. Li (father of Taiwan Economic

Miracle)

“The greatest advantage I had as economic affairs minister was I never had a course on

economics” - Li

Li’s achievement for Taiwan:

• per capita GDP of $10,000 (up from $130)

• inflation rate of only 2.2% for the past 50 years;

• fifth biggest foreign reserves• highest GNP growth (9%) of any

country for the last 60 years

Li’s 5 Broad Principles

• The starting point is population control• Never print money you do not have• The government job is to make people

rich (not fight poverty alone)• Timing is more important than

ideology• Create and honour the entrepreneurs

The best economic policy ever invented

“common sense”

The best policy

“Keep bright people out of the government. Keep them in private sector where they

can do good”

Charles Millard in New York City

Economic Development Council

Responsible for the Silicon Alley and New York City Discovery Fund

Responsible for the Silicon Alley and New York City Discovery Fund

“A little bit of money”

“First do no harm”

President Reagan – Reaganomics though

controversial probably saved USA from economic

stagnation

President Ronald Reagan

Important piece of legislation – Kemp Roth Act

Jack Kemp and Pres Reagan (a football player and an actor) brought

back USA to progress

Important provisions of Kemp Roth Act

Main features of the Act are:1.Reduction of tax rates by 25% over three years; 2.Accelerated depreciation deductions; 3.Indexed individual income tax parameters; 4.Exclusion of income of two earner married couple by 10 %;5.Reduction in windfall profit taxes; and6.Expanded provisions for employees stock ownership plans.

President Bob Clinton

Bob Clinton and US economy:

Bill Clinton on Budget Economy

Longest Economic Expansion in US History In February 2000, the United States entered the 107th consecutive month of economic expansion -- the longest economic expansion in history. 22.2 million new jobs have been created since 1993, the most jobs ever created under a single Administration -- and more new jobs than Presidents Reagan and Bush created during their three terms. 91 percent (19.9 million) of the new jobs have been created in the private sector, the highest percentage in 50 years. Unemployment is down from 7.5 percent in 1992 to 4.0 percent in June 2000, and in April the unemployment rate was the lowest in over 30 years. The unemployment rate has fallen for seven years in a row, and has remained below 5 percent for 34 months in a row.The poverty rate has fallen from 15.1 percent in 1993 to 12.7 percent in 1998. That’s the lowest poverty rate since 1979 and the largest five-year drop in poverty in nearly 30 years.

US Budget Deficit under Clinton (with tax cuts)

GDP per capita growth in US (note the cresting at time of Reagan and

Clinton)

Reference:

The New Entrepreneurial Age by Larry Farrell, 2011, Brick Tower Press

Credits

Presented and Prepared by:

Prof. JORGE U. SAGUINSIN

Ateneo Graduate School of Business

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