Government Insights

Self Propelled Economy

In particular emerging countries often times struggle to get their country into a self sustained nation. As long as countries are needing monetary aid from other countries, they are not independent. Innovation and entrepreneurship is the number 1 exit from dependency as shown with all developed and independent countries. Of course there are many dependencies but no longer on the level of monetary aid.

Self propelled economy is when a nation has creative entrepreneurs who can found their own company, get investments and build products that can be sold world wide. For instance a country with 30 million people needs less than 1,000 companies and approximately 2,500 successful entrepreneurs, in order to create a prospering ecosystem in the next 10 years.

Critical success factors are that capital can freely get into and out of the country, the country has a respected education system to develop talents and it has a perceived corruption index of less than 40.

Export capabilities

In our research to look for patterns of success for emerging countries and even developed countries we are now lead to believe that the ultimate driver for prosperity is EXPORT. It proved our theory that the wildly fast growing startups in Silicon Valley have been the biggest contributors to the Californian wealth. Not because of their valuations or rich Founders, but because of their export power. The wealthiest countries in the world have also the highest export volume / capita.

Countries that are determined to grow from less developed to emerging and emerging to developed may consider using export per capita as an internal KPI to monitor their path to an independent country with self propelled economy.

Innovation Infrastructure

Governments on the move to scale up their society may consider building a highly attractive innovation and entrepreneurship infrastructure first. From a high level, global point of view it is rather obvious that the most developed countries made their enormous advances in their economic and social structure thanks to early participation in the industrialization of their country – with all the sacrifices associated with it. The next major shift with artificial intelligence, smart materials, human augmentation, block chain, bio technology, nano technology, gene technology and even further branches developing right now, the distance between developed and least developed countries is still widening. Yet we are still ata stage where any culture can pick up. Countries like Columbia, Nepal, Nigeria are good examples.

The key inner improvements include, internationally compelling and transparent financial structure and easily understandable and business friendly law, support for entrepreneurial mindset, openness for flexible regulations that allows entrepreneurs to work yet protects the overall society, and an adequate communication and transportation infrastructure,.

Entrepreneurship Culture

For entrepreneurs to freely develop disruptive products and business models, they need to live in an environment that gives them total freedom. So far pressure, limitations or predefined goals have not lead to any success. The wide open Silicon Valley culture has proven success by revolutionary technologies the companies created and brought to market. Former top innovative countries like Germany did not bring any outstanding innovations in the technology space forward. Even China with all its extraordinary development and general business successes, have yet to prove it can actually create innovative products and make them globally successful.

That entrepreneurial spirit cannot be enforced – like love cannot be enforced. Both can be faked, yet it would never be genuine.

Business Financing

The ability to fund extremely fast growing companies during their major growth period is one of the key aspects to get startups to great success, eventually go global and come into the export zone that is actually responsible for the prosperity pf a country.

Startups that grow and then get sold to a large enterprise maybe a small personal success for the founders but has zero impact on the overall population. In the end it is actually a negative impact as the true economic value may go into another country that expands on their financial prosperity at the cost of the country that let their innovation go. The overall investment regulation and laws are critical to business finance which then is critical for the growth of the companies.

Digital Overprotection

Digital overprotection whether it is created by certain needs or stimulated by whatever external forces is a powerful instrument to bring the development of any given nation down. Consumers get irritated, developers recognize a stagnating market, investors get nervous and eventually the technological development falls behind. An unfortunate example is Europe. The request for confirming cookies with every single website visit, becomes not only annoying but irritates users. While nothing gets really protected a whole market is requested to do things that make no sense. Similarly with perceived spam protection roles that have the only effect to slow business communication down, yet no improvements are delivered.

Governments are requested to make sure that people responsible can fully comprehend the impact of those decisions.

Legal Simplicity

Innovation is usually disrupting existing behavior, processes, ways of doing things. We can see that in the development of Artificial Intelligence, Blockchain, equity crowdfunding, most fintech applications, self driving cars, new vehicles in general and so forth. All of them and many others are touching existing law one way or the other. Governments need to be agile enough to not protect the old to a time when the global competition is requesting them to move.

An important proactive measure is to simplify existing law. Of course it is a daunting task however there will be a time in the near future where it becomes  is inevitable. Nations will need to establish laws regarding flying vehicles, smart self acting materials, bio materials for human augmentation, autonomous financial transaction systems, biological materials for buildings, bridges and all other constructions, legal questions regarding autonomous machines, conscious machines, human machine hybrids, rights of those hybrids and much more. Today’s legal patch work can’t sustain.

Regulation Support

The ever growing complexity of our technologies and advances in other areas such as agriculture, biology, medical, food, buildings and so forth will need rather fast adjustments of regulations. While more and more experts are needed within the country, a growing need will emerge to gain expertise, ideas, concepts from other countries. In  particular affected countries.

For instance, assuming a country shows enormous progress with chat bots and can displace most call center business within 24 month. This will cause in a country like the Philippines 5 million people to become unemployed and almost 10% of the country’s GDP to evaporate. In a scenario like that, it is very important for nay country to be aware of what’s coming.

Collaborating governments more or less globally will be soon no luxury anymore but a requirement.

Adequate Taxation

Taxation is in many countries still in two ways a serious obstacle for a healthy entrepreneurship community. The most significant roadblock to success is the taxation of equity values based on valuations and investment rounds. Governments must understand that those values are future values that investors pay ion order to participate in the achievements of those values without those values to materialize at this stage. Either investors need to make absurd structures to avoid the tax or simply don’t invest.
The other, less significant challenge is the taxation of early profits that are much needed to reinvest in the business.