Global Entrepreneurship Monitor: Pakistanis less enthusiastic about entrepreneurship

Country counted among factor-driven economies.

Kazim Alam December 24, 2011


Pakistanis have less favourable attitude towards entrepreneurship than the people living in other countries under similar economic conditions, according to a report by the Global Entrepreneurship Monitor (GEM) released here on Saturday.

GEM is an international research consortium, which measures entrepreneurial activity of individuals in 59 countries.

The GEM report on Pakistan for 2010, which was sponsored in the country by the Centre for Entrepreneurial Development of the Institute of Business Administration (IBA), divides 59 countries into  three categories: Factor-driven economies, efficiency-driven economies and innovation-driven economies. Pakistan falls into the category of factor-driven economies.

Explaining the objectives of the research, Centre for Entrepreneurial Development Associate Director Dr Shahid Qureshi said it measured entrepreneurial attitudes, activity and aspirations through in-depth review of individual entrepreneurial characteristics of the adult (18-64) population in all parts of the country.

“It also lists factors that affect the level of entrepreneurial activity in society besides making suggestions to promote entrepreneurship,” Qureshi said.

According to the report, the new business ownership rate, which is the percentage of owner-managers of a business that is three to 42 months old, is 2.7% in Pakistan. It is ‘considerably less’ than the average rate for factor-driven economies (11.8%).

The established business ownership rate in Pakistan is 4.7%, according to the study, which is less than the average rate for factor-driven economies (12.6%).

The report’s key measure of entrepreneurship in a society is total early-stage entrepreneurial activity (TEA) rate, which is the sum of the nascent entrepreneurship rate and the new business-manager rate. According to the study, the TEA rate for Pakistan is 9.08%, which is lower than the average TEA rate for the factor-driven economies (11.7%).

The report says that early-stage entrepreneurs and business managers in Pakistan have low aspirations to grow as compared to most GEM participating countries. Besides, the report says that 27.73% of the total working-age population, including those who are entrepreneurially active, was of the view that fear of failure would prevent them from starting a business. However, the fear of failure in Pakistani population is less than the average of the factor-driven economies.

Speaking on the occasion, IBA Director and Dean Dr Ishrat Husain said the cost of IBA’s affiliation with Babson College of the United States was $1 million a year. “Despite all financial constraints, we’re not going to give up the affiliation.” Husain said that out of the national workforce of 50 million people, the large-scale manufacturing sector employed only one million people. He said a majority of the 49 million people was employed by the agricultural sector and small and medium-size enterprises.

Addressing the ceremony, Sindh Finance Minister Syed Murad Ali Shah said he dropped out of IBA after taking one semester many years ago. In contrast to the findings of the report, which emphasised the importance of entrepreneurship education, Shah said it was more about the urge within oneself. “Don’t count on others. Follow your gut feeling and do what you want,” he said.

Published in The Express Tribune, December 25th, 2011.


Rizwan | 12 years ago | Reply

There is no doubt in the fact that only and only entrepreneurship has the power to accelerate the wheel of Economy. Especially in a country like Pakistan where Economy is in deep trouble. I truly believe that not only educated youth of Pakistan but each and every person whether rich or poor, young or old, rural or urban, can play his vital role in the economic development of our country.

Now the basic need here is to create the basic awareness about entrepreneurship in all three tears of our society. Especially dissemination of entrepreneurship at the bottom of this pyramid is vital because it consists of more than half of our population.

As far as the entrepreneurial education, I would like to mention that University of Central Punjab Lahore is playing a vital role. For the 1st time in Pakistan they are offering MBA with a specialization in entrepreneurship. Other business schools should also take this initiative because business schools tend to produce entrepreneurs and not the brand managers.

Riaz Haq | 12 years ago | Reply

The results of this IBA CED study run counter to the findings of a recent World Bank report titled "More and Better Jobs in South Asia" which shows that 63% of Pakistan's workforce is self-employed. Salaried and daily wage earners make up only 37% of the workforce.

It seems to me that this discrepancy stems from a very narrow and limited definition of entrepreneurship used in the IBA study which ignores the following realities:

The rapid urbanization from massive ongoing rural-to-urban migration in Pakistan is spawning a whole generation of small entrepreneurs who end up working for themselves as small vendors selling their wares on the streets and independent service providers who do basic chores like cooking and cleaning for dozens of clients. Each of these individuals is an entrepreneurs by definition.

There are many small groups of men and women who are starting businesses at home in both urban and rural areas of the country to sell groceries, sew clothes, raise animals for milk, grow and sell fruits and vegetables, cater cooked food, etc.

People at academic institutions like the IBA who talk about entrepreneurship must research examples like Kraft Foods and Carl's Junior, both of which had humble beginnings on the streets of the United States.

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