Entrepreneurship is something more

By Hernan Villamizar (Colombia)


The creation of companies and the driving goals of the businesswomen and men behind them is a topic barely addressed in recent economic analyses. At the same time, it is one of the most essential phenomenon of a free market economy and it is what actually brings it to life.


Theoretically, the one and only reason why a firm would originate and the enterpriser be willing to take the risk of financing it, is because there is a market loophole and they expect an economical return on it. That is it.


What amazes me every time I get to talk to company founders, start-up’s managers, self-employees and freelancers, however, is the fact that even if money is an important incentive, creating capital is neither the only purpose, nor is it greatly over proportional in comparison to other objectives they may have.


There is always a bigger reason behind the project façade of profit. Be it social commitment of any sort –with the family, friends or the community– or the hope for further personal development, making some bucks as an end in itself seems to be not enough for even the most conservative business people.


In my view, objectives like time flexibility, economic and creative independence, and the need for challenges are far more urgent necessities for the entrepreneur. They are the exotic spices of that secret recipe which is the start-up company.
That is the story told, not only by the millions of business women and men who have got rid of their employment ties to pursue an own idea, but also by the millions who populate the huge workforce in our informal economies. A story of an ambition that is larger than they are expected to have.


Latin Americans, both in their home and emigration countries, have been driven to take the chances of entrepreneurship for many social and economical pressures. Countries, where they are excluded from the usual labor market or where employment contracts and social security are weak, leave them very often no other possibility than taking the charge for their economic survival into their own hands.


What gives them the power to take the risk and to fight against improbable odds is not only a sense of urgency or survival instinct. Spanish and dance teachers, restaurant and bar owners, hairdressers and shop owners, investors and corporate associates, they all have something in common: ambitioning more!

Mexico's competitiveness from the point of view of the PISA project

By Farid Bielma López (Mexico)

“Science is a tool that helps to accomplish your ideas, and not a desert to be crossed to get a good job”

a) Current situation:

PISA is an OECD project which aims to assess in how far students, near the end of compulsory education, have acquired some knowledge and skills regarded necessary for full and active participation in our society of knowledge.

The PISA tests are conducted every 3 years and assess 15-year-olds at any grade level from seventh grade onwards; the test examines the skills necessary for modern life in reading, math and science. Level 2 represents the minimum regarded necessary for life in today's society, and achieving levels 5 and 6 means that a student is ready to perform complex cognitive activities.

In Mexico, 50 percent of 15-year-olds are at levels zero and one, the lowest in academic achievement in science skills, math and reading, which means they are less skilled to move to higher education and resolve basic problems.

In contrast, not even one percent is classified within the top level of the three skills assessed in the program.

These results place Mexico at the bottom of 30 countries of the OECD regarding scholastic achievement in the areas of science, reading and math.

Analyzing the results of PISA shows that the Mexican educational system must face two major challenges:

• On the one hand, Mexico has a high proportion of students below Level 2 (around 50%), which means that many young people are not being prepared for a productive life in society.
• In addition, the country has too few students in the higher levels (less than 1% at levels 5 and 6), which means that students fail in developing skills required for high-level positions in the various fields of society.

b) How can we improve?

The PISA results confirm that in the short run no dramatic changes can be expected to happen in the field of education, and that underdeveloped countries such as Mexico may not achieve results comparable to those of advanced nations; the government’s main failure lies in the neglecting of certain regions where the education quality is worse off and where a substantial raise of the education level seems inevitable.

An important point is the gradual involvement of new technologies in the teaching and learning process - teachers shall be able to generate content to supplement classroom activities and in the learning process children shall be granted access to digital services.

In general, to improve we must apply the same principles used by rich countries:

• Generation of technological innovation (a portion of PIB is devoted to research).
• High levels of investment in physical and human capital (required to raise the level of national competition).
• Governmental policies that seek to raise equity in the educational agenda (to generate equal opportunities).
• A decentralized market economy (to reduce dependence on foreign companies).

Another important point is that in Mexico most of the graduates choose psychology, law, humanities and other areas, while the country actually produces very few engineers or professionals related to the sciences.

Education has to turn to help students think for themselves, stimulating intellectual curiosity and prioritizing competitiveness.

The real key to Mexico's competitiveness is education, hence its importance.

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The real cost of cigarettes

By Daniel Cadena López (Ecuador)

Five days ago I decided to leave the cigarette, I hope this time is forever. I have several reasons for stopping smoking and my economy is one of them.

A calculation proposed by a site on Internet made me realize that I was smoking around 19 thousand dollars per year. So, I was giving all this money to the tobacco companies, because they had the permission of trashing my lungs, digestive system, throat, teeth, skin and energy. In fact I did it for 10 years.

Every year, cigarette and all its world costs the world 500 thousand million dollars in indirect medical expenses, lost productivity and environmental damage, according to the American Cancer Society. An average smoker consume around 20 cigarettes at day (One package), pays around 5 dollars for them and will spend at the end of the year on total 1 thousand 825 euro only in tobacco. More than 150 euros of each salary are destined to be smoked. A big saving is not to smoke if you see things from a different perspective. The costs of water, electricity, phone, internet and heating of a small family can be compared with smoking expenses.

The next time that you light up a cigarette, while thinking worried what to do for your salary to be enough, you should start for throwing that tobacco away. A hard decision, but not impossible that will break the suicide that more than thousand million people started in the world.

The sales of cigarettes are still on top, in spite of all the taxes, prohibitions of smoking in public areas and advertising policies against cigarette. In developed countries like the United States, Great Britain and Japan, the consumers of this drug started to decrease. But in the developing countries the smokers are every day more and more.

Starting from that I propose an individual analysis, because the direct relation between consume of cigarette and economy seems undeniable. In the States they know it, because smoking affects 3,6 per cent of the Gross Domestic Product (GDP).

Smoking can give an enjoyment and as an ex smoker I can say it, but it last not long. The pleasure is not that big when we think about the unpleasant and devastating consequences of the cigarette in a short and long term.

Happy new year 2011!!!

Why is the COP16 a big deal in Latin America?

By Ram Murguia (Founder)

Recently, many people have asked me two things: (a) "Ram, why is the COP16 so important in Latin America?" and (b) "Why will COP16  not carry out any significant agreement?


Let´s point out some relevant facts that impact the Latin American region.

Answer (a)
1. Row Materials: Latin America owns huge amounts of commodities like timber, minerals, WATER, animals -available on the black market- and so many more that other countries and companies require.

2. Territory: Companies need space to set up their factories on, and most of them contaminate earth, water and air. That is when corruption comes into play and policy makers are bribed by many companies to soften their policies.

3. Labour: In developed countries, risky and hazardous jobs are strictly forbidden. That is why many companies go abroad to look for corrupt countries and cheaper work force.

Answer (b)
We live on a planet dominated by huge companies that need to sell something at the expense of contaminating the only house we have. They do not care what will happen tomorrow, they need to fix their balance sheets today.

If you keep wondering why these kind of meetings matter, just think how any company or policy indirectly affects you.


OFFICIAL DEFINITIONS: http://cc2010.mx (from the official website)

Latin American Countries: A Dynamic Analysis of Country Clusters, the Role of Corruption and Implications for Global Firms

By Prof. Grein, Ph.D, (City University of New York, U.S.A)

(From “A Dynamic Analysis of Country Clusters, the Role of Corruption, and Implications for Global Firms”, Andreas F. Grein, S. Prakash Sethi & Lawrence G. Tatum, Zicklin School of Business, Baruch College, the City University of New York, July 2009; forthcoming East-West Journal of Economics and Business).

            Country clustering has been explored as a technique for reducing the complexity and exploring relationships between countries.  Rather than examining country level indicators (such as economic statistics) separately, clustering can determine which countries are similar and explore the relationships driving cluster membership.  We examine 39 countries using economic, technological, cultural, demographic and quality of life variables.  Corruption is captured using Transparency International’s corruption perceptions index (CPI).  The data cover 1995, 2000, and 2005.  Principal components analysis reveals 3 factors and the role of CPI is relatively stable over the period studied.  Of particular interest are changes in the cluster membership of 5 Latin American countries: Argentina, Brazil, Chile, Mexico and Venezuela.

            In 1995 these Latin American countries form a cluster which also includes Russia and Poland.  It appears that regional similarities are important, but Russia and Poland have sufficient similarity to the Latin American countries that they joined this cluster.  This cluster has a relatively low average CPI value (3.87), indicating a high level of corruption but there is a large range in CPI scores (Venezuela 2.5; Brazil  2.96; Mexico 3.3, Argentina 3.41; Chile 6.8).  Clearly there are many factors which determine why countries join the same cluster, and corruption is only one among these factors. 

            By 2005, the Latin American countries have joined a cluster with Asian countries (e.g., China, Indonesia, Philippines).  Again this cluster has a low average CPI (3.63) with a large range of from Indonesia (2.2) to Chile (7.3).  (Other Latin American countries’ scores are: Venezuela 2.3; Argentina 2.8; Mexico 3.5; Brazil 3.7.)  This is a very intriguing finding because the role of regions appears to have diminished so that the Asian and Latin American countries are broadly speaking similar.  However, it would be incorrect to conclude that corruption does not hurt country economic development.  For most countries, CPI values do not change much over time.  While corruption imposes costs on doing business, stable and predictable corruption could give firms the opportunity to form effective strategies for succeeding in such an environment. What is surprising in this analysis is that countries appear to be increasingly similar (in terms of cluster membership) despite divergence in the level of corruption. 

            The role of corruption, in terms of influencing similarities between countries, could be overstated if not examined in conjunction with the many other variables which represent a country’s well-being. Without a doubt, it is beneficial to reduce corruption.  Countries, institutions and policy makers must evaluate which problems to tackle first and with what means.  However, this research suggests firms may view certain countries as becoming more similar even if the level of corruption appears to be quite different.