"Double Dip Warning"

Another crisis looming?

Since the financial crisis of 2008-10, I've followed the commentaries and opinions of Paul Krugman and Noriel Roubini to make sense of how the world financial system works (or doesn't work).  In my opinion, these two economists have made the most sense of how fragile the global financial system is due to the structural (and cultural) deficiencies of the American banking system.

Now the two are saying that a "double dip" is becoming more and more possible (for various reasons).  Paste the links below on your browsers for a good heads-up on what could happen within the next few months. We might have escaped the first one, but will we be able to do so if it happens again? 

http://www.nytimes.com/2010/08/27/opinion/27krugman.html?_r=2&partner=rssnyt&emc=rss

http://voices.washingtonpost.com/political-economy/2010/08/roubini_aka_dr_doom_predicts_d.html

http://www.gurufocus.com/news.php?id=105576

http://www.propublica.org/article/banks-self-dealing-super-charged-financial-crisis

Entrepreneurship: Promote Entry BUT also Exit

Schumpeter's "entrepreneurship" revolves around the idea of creative destruction: that endless cycle of competitive firms forcing uncompetitive ones to retire and exit.  In this view, resources will naturally follow those that can innovate better and produce "temporary monopolies" that the market appreciates.  These competitive firms will benefit from their "monopolies" until more innovating players come along and pushes them out of the market.

Schumpeterian entrepreneurship implies then that a healthy economy is one where firms are allowed to enter but also exit.  Supporting uncompetitive firms will distort the cycle of creative destruction and to some commentators, will "stunt" the real value of entrepreneurship to the economy.  In the end, intervening to keep uncompetitive firms afloat prevents the efficiency of the market to allocate resources to more deserving ones.

This is not to say, however, that interventions to push for entrepreneurship must be avoided.  It only means that the interventions, both on firm and sector levels, need to be more conscious of the possible repercussions to the natural efficiencies of the market to choose which firms can multiply resources and value better.  While it has long been established that the market cannot do it alone and fails miserably a lot of time, it has to be admitted (and it has been established empirically too) that it's doing a pretty good job in keeping wasteful firms out of the playing field.

Does the government and "the academe" understand "entrepreneurship" in the same way?

In research literature, entrepreneurship as a strategy for development arises from an understanding of Schumpeterian growth theory. The basic thesis of this understanding is that the level of entrepreneurial activities in a given economy influences economic growth and development through the process of “creative destruction”. Creative destruction is rooted in Joseph Schumpeter’s view that economic expansion will come from a continuing cycle of replacing uncompetitive economic actors and systems (i.e. firms and industry structures) with competitive ones that possess short-term (temporary) monopolies of innovative business activities (referred to as firm entry- exit; turbulence). In this view, the basic imperative to improve growth and development is to provide a correct set of incentives that will increase and sustain entrepreneurial habits in a given economy.

With the foregoing in mind, it is quite interesting to assess whether government initiatives on entrepreneurship is consistent with and actually rooted in the opinions of research and the academe. This could be done by reviewing actual government policies on entrepreneurship vis-a-vis the literature on entrepreneurship, and finding out whether the two sets of "thinking" are converging or not.


(A recent review of literature, mostly revolving around the works of Audretsch, Acs, Baumol, Miniti, Thurik, Reynolds, etc. and other colleagues, will suggest that the government's understanding diverges with those asserted by theoretical and empirical entrepreneurship research.)

Entrepreneurship: Did the government get it right?

The past administration was able to release its target of P310B worth of loans to M/SMEs--at least according to their press release.  In the 2004-2010 MTDPD and SMEDP, the expectation is that this amount will be able to help about 3 million entrepreneurs (mostly start-ups as there are less than 1 million registered micro, small and medium sized enterprises) who are then expected to consequently generate 10 million jobs.  Reading the numbers, the arithmetic seems quite simple--1 entrepreneur who will be assisted with loans will be able to provide about 3 to 4 jobs each.

(But if they targetted to assist about 3 million entrepreneurs, and assuming that there is less than 1 million enterprises (as of NSO statistic there are just about 800,000 to 900,000 firms in the Philippines, with M/SMEs comprising 99.7%) in the Philippines, were they really able to create 2 million nascent enterprises?  Or did they include lending to unregistered firms through wholesale tie-ups with MFIs, et. al.?) 

However, the actual count of jobs generated from the program was just about 1/3 of the target--also according to government press releases.  If they are not mistaken, this means that either the targets that the government set for itself were too high, or that something went terribly wrong.

(Is there existing data regarding the GVA that M/SMEs were able to contribute during the period?)

Recent data from the global entrepreneurship monitor (GEM), a consortium of academic institutions monitoring entrepreneurship around the world, will suggest that the targets were set too high.  Entrepreneurship simply do not have the capability to provide those numbers in a very short period of time.  As per GEM statistics, of nascent entrepreneurs in developing countries in Asia, only 3% of enterprises can actually provide about 5 jobs and 90% can only provide 1 < 5 jobs.

While I have reasons to believe that the findings of GEM can explain the shortfall (and thus should guide future policy interventions for entrepreneurship development and what to expect from it), this does not mean that nothing went terribly wrong, too.

Enterprises as Vehicles for Development

Due to their sheer number, micro, small and medium-sized enterprises (M/SMEs) are being pushed by the government, civil society and by the private sector to be more productive so as to increase their gross value added contributions to the economy and provide more opportunities for employment.

While these are worthy endeavors, it might also be a good idea to "discipline" M/SMEs as early as now with practices of eco-sustainability and social consciousness.  Again, due to their sheer number, the effects of the operations of M/SMEs to the environment and society will be ambiguous if not consciously considered.  To be safe, it has to be expected that MSMEs will not act "rationally" and therefore safeguards have to be instituted.

Will you go back to management school?

Why is it that not a lot of people who take undergraduate management courses would want to study again after they've graduated?  Sure, a lot of them will say that they'd want to pursue further studies in the future: that is if you ask them while they're still in college and all they're exposed to are their books and their professors.  But what's the real count? How many really go back for further studies?

From my experience, unless their jobs (or pay) require an additional degree like an MBA, most will continue to go on with their professional careers. And I think this is not because they do not care to learn about management further.  Rather, I think it is precisely because they are learning more outside of educational facilities that they do not see the value of going back to school.  It is as if they have realized that real world competencies and knowledge that can be applied in the workplace are absent in the classroom.

I guess what I'm really thinking is this: if management education is of real value in the real world, why aren't many people re-investing after they've gone through it in college?  Have they learned all there is to learn?  Or is it simply just impractical and useless (read waste of time and money)?

(The experience is not the same especially in the field of ICT/IT, medicine, agriculture, and others in the field of science, etc., where people really seek out courses to learn further.  Can't management education be as practical and grounded?)

Research as Storytelling: A Quick Thought

Research is not solely about gathering mountains of data: it's not about reciting facts and figures, and it's not about showing fancy graphs and tables.

Research is about making cohesive stories about reality and seeing how sets of figures and facts fit in the bigger picture.  At the end of the day, research must be able to help people understand how things are, and how things can be changed.

Researching on the Internet

Before you tell your professors, bosses, or clients that there's no existing data on what they want you to research on, try again.  Chances are, what you're looking for has already been researched before, and some information about it will be up on the web.  It's really just a matter of knowing where to look.

Here are my two centavos worth about researching on the Internet:

(1) Basic Data from the Government

The government is a great source for basic data.  Whether you're researching for business purposes, development issues, policy stands--or if you're just plain curious about how the world is described by data--government websites (and offices too) are excellent starting points.

For basic accounts--demographics, socio-economic profiles, population make-up, employment, national, regional and provincial economic information, etc.--it's always good to visit the websites of the National Statistics Office (NSO) at www.census.gov.ph, the National Statistical Coordination Board at www.nscb.gov.ph, and the National Economic Development Agency at www.neda.gov.ph.  These websites are full of basic quantitative accounts that can give you a "macro"or "overview" perspective for your research project.

Apart from the websites of these national offices, local government units are also great sources for information.  If you're looking for localized data describing particular municipalities, cities and provinces, it is a must to look up the websites of your targeted localities.  Extensive information are usually contained in their CLUPs or Comprehensive Land Use Plans, apart from other local reports and planning documents.


(2) Sectoral Data

If you're taking a look at issues that relate to a particular sector or industry--e.g. agriculture, business, tourism or the automotive industry, hotel and tourism industry, O/O industry, etc.--then naturally, you should visit the websites of the departments and agencies that deal with those issues.  This sounds obvious, but not a lot of researchers actually do it.

From my own research projects, for instance, I've had some good experiences with the Department of Agriculture (when I was researching for clients in the meat processing industry), the Department of Tourism (whenever clients ask that I look at the feasibility of hotels, real estate developments, etc.), the Department of Trade and Industry (when I'm looking for industry and market reports, investment profiles, firm accounting, industry performance, etc.), and the Department of Health (once, when I had a client that needed guidance for a health and wellness business).  While I have no first hand experience from the government's other websites, feedback from my colleagues who monitor regularly other industries and sectors are also quite positive.

BEWARE however.  As a researcher, you have to have the ability to look for "facts" and not press releases that of course, have different intentions.  Most of government websites also contain press releases and "opinions" and it's our job to separate facts from "fiction".

(2) Analyzed Data by Government Experts

If you're not satisfied with just pure data and want to look at how experts analyze data and issues, visit the websites of government think tanks.  My favorite web destinations include those of the Philippine Institute for Development Studies (www.pids.gov.ph), the University of the Philippines' School of Economics' (www.econ.upd.edu.ph) and occasionally, the Philippine Senate's (www.senate.gov.ph).  While not a government office, the website of the Asian Institute of Management's Policy Center is also a good source of experts' analysis.  I'm tempted to include my college's website, but there's actually nothing there.

(3) Other Websites, Other Experts:

Multilateral Agencies

Multilateral agencies such as the United Nations, the World Bank, the International Monetary Fund, and the Asian Development Bank house quite a number of datasets on various issues that might prove helpful in your research endeavors.  Often, they provide public access to their raw data (mostly in MS Excel format) that you can actually download and manipulate.  

Apart from raw data, these agencies also analyze a wide array of issues from business, to health, to education, to the environment,  to economic competitiveness, etc. so you can safely hope that they have something to say about your research interests.  Most of their publications are accessible in their e-libraries for free.

Independent Firms

You can also visit websites of consulting firms, industry/sectoral associations, knowledge-building institutes, research centers and foundations that continuously gather data and publish reports on specialized topics.  For instance, when researching for my personal interest which include entrepreneurship and SME policy, I'd always check on the websites of the Kauffman Foundation and the Global Entrepreneurship Monitor.  These two sites house leading researchers in the field so I'm quite confident that I'm updated with the latest findings.

Other sites that have special focus include the Global Information Technology Report's (GITR) website which deals with global and local ICT issues; the World Competitiveness Center for economic competitiveness issues and the McKinsey Global Institute for quite a number of popular and pressing industry and government issues.

I'm sure that other emerging and traditional research interests have several consulting firms, research centers and learning foundations that provide valuable data on the web.  It's just a matter of finding these websites and keeping in touch with their developments.

(3) Expert Blogs, Video Clippings and Their Worth

If you know who the experts are in your field of interest, search for their blog sites (or for blog sites about them) and for video clippings of their interviews/lectures.  While these sites may not contain a lot of data and statistics, they surely will be full of valuable insights that can push you to analyze your research interests better.  Visiting these sites also tend jumpstart understanding on topics that are quite difficult to grasp.

For instance, during the time of the global financial crisis, my favorite web destinations were those that belonged to Paul Krugman, Larry Summers and Noriel Roubini; and interviews of other experts such as Ben Bernanke, (and Ben Diokno) clipped from Bloomberg, Charlie Rose and even ANC.  While international finance is by no means my expertise, reading these experts' opinions and listening to their interviews provided me quickly with a working understanding of the complexities of the what was going on.

(4) e-Books and Publications

Finally, don't forget google books and websites that contain refereed publications about your research interests.  The former actually lets you through thousands of books and publications (except for several pages per publication), while the former provides research abstracts that somehow already tell you the conclusions and methodologies of research papers.  Google books can easily be accessed via the google homepage, while websites that manage refereed publications include www.ssnr.com and www.jstor.org.  Most of the publications/articles on these sites are for sale, but these websites go on "promo" mode a couple of months a year, so download as much as you can during these windows.

To end, don't forget the websites of leading international and local research universities and colleges such as Stanford, Yale, Harvard, MIT, and (locally) UP and UA&P.  A lot of these schools give public access to some of their professors' research work.

That's it for now.  Hope this blog helps.  I'll follow it up with a part two if there's anything more that I come up with.