In 2008-09, the labour force in Pakistan grew by an estimated 3.7 percent. The expected growth in the coming years is said to be greater according to the Economic Survey of Pakistan 2009-10. In wake of the given labour force growth rate, and with a growth in GDP forecasted at 4.5 percent, it is very likely that the unemployment rate will increase from the approximately 6 percent that it is today.
Given this scenario, in a call to revive the growth of entrepreneurship in Pakistan, the Institute of Business Administration (IBA) intends to set up a Centre for Access of Finance (CAS) to provide financial assistance to outgoing graduates to start up their own businesses rather than look for employment elsewhere.
Vision and foresight is quite evident in this new initiative taken up by the IBA. Entrepreneurship can go a long way in spurring economic growth in a country; a 2009 report of the Global Entrepreneurship Monitor (GEM) states that a positive correlation exists between opportunity-driven entrepreneurial activity and the real GDP cycle measured two years later in OECD countries.
Job creation is also stimulated through entrepreneurial activity since only a small percent of jobs are created by relocations within existing businesses. Expansion of the existing setup or a new entrant is what leads to the majority of job creation in an economy.
According to TiE (The Indus Entrepreneurs), a not-for-profit organization promoting entrepreneurship, each entrepreneur creates an average of 30 jobs in the economy.
On a macro level, entrepreneurship leads to greater investment with more individuals involved in wealth creation in the economy, and attracts FDI in the country over a period of time.
Yet, boosting entrepreneurial activity is not as easy as it may seem on the surface, particularly in Pakistan. In a Pakistan Institute of Development Economics (PIDE) working paper on entrepreneurship in Pakistan, Naeem-ul-Haq mentions factors such as corruption, rent-seeking, poor administration, lack of legal frameworks, constraint of financing and lack of research, expertise and knowledge as barriers to small business growth in the country.
While most of the cited factors are beyond the domain of educational institutes, they do sit behind the wheels as far as research skills and knowledge creation is concerned.
Even though start-up financing is a major constraint for potential entrepreneurs, and IBA has taken a laudable step in the right direction, a lot still needs to be done to encourage research and knowledge creation as this is the key to new ideas and innovation.
Most of the ventures initiated by upcoming entrepreneurs are mostly service-focused, and then too, most are imitators not innovators. To encourage innovation, skills-based education needs to be encouraged as much as management-focused education.
Perhaps an integration of entrepreneurship initiatives between management and technical schools will push the right buttons for innovation and entrepreneurship in Pakistan.
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