As I have become more involved in the International Council for Small Business (ICSB) I have had the pleasure of getting to know entrepreneurship champions and educators from around the world. With these acquaintances and my travels I have come to recognize how very important the middle class is to the standard and quality of living in various countries. People do not always make the connection between the phase of economic development in which a country finds itself and the relative size of its middle class.
When people talk about the economic opportunities in the BRIC nations they are really talking about the untapped purchasing power of their populations. China and India have the largest populations. But population size by itself is not the driver of opportunity and improved standards of living. It is the development of higher value added goods and services that command a higher price which in turn allows the producers and providers to increase the wages of their workforce. It is this “market pull” that allows for the movement into a middle class. As the middle class grows as a proportion of the total population, the higher the overall standard living.
There have been books and massive studies done to try to find ways for creating that better quality of life and standard of living. But let me offer one observation. Entrepreneurship and entrepreneurial activity play an incredibly important role in helping societies advance. The Global Entrepreneurship Monitor reports that there is actually more entrepreneurial activity less developed economies that are reliant on subsistence farming and natural resource extraction industries than there is in developed economies where innovation is considered the primary driver. And the difference is significant with about 23 percent of the adult population involved in early stage entrepreneurial activity for the less-developed and underdeveloped economies compared with about 5.5 percent for the developed economies. And while there is some variation from country to country, people seem more motivated by necessity in the less developed economies with little regard to the form of government or economic policies.