Fluent Essays

Each student will write a short research paper for a peer-reviewed research paper that pertains to the week’s assigned reading. This will be a detailed summary of the research paper and what you gained from the research. Each week, you will find an article/peer-reviewed research paper that pertains to the weeks assignment. If you have a difficult time, Google Scholar is a wonderful location to find these types of articles:https://scholar.google.com/Once you find the article, you will simply read it and then write a review of it. Think of it as an article review where you submit a short overview of the article.Your paper should meet the following requirements: Be approximately 2-3 pages in length, not including the required cover page and reference page. Follow APA6 guidelines. Your paper should include an introduction, a body with fully developed content, and a conclusion. Support your answers with the readings from the course and at least two scholarly journal articles to support your positions, claims, and observations, in addition to your textbook. The UC Library is a great place to find resources. Be clearly and well-written, concise, and logical, using excellent grammar and style techniques. You are being graded in part on the quality of your writing.*All outside sources must be referenced and cited in your paper. All papers will be reviewed with a plagiarism software. Any references not properly referenced and cited will result in a 0 on your paper. Multiple violations will result in a failure for the course! kresselhenrylen_2012_1governmentbossfinanc_entrepreneurshipinthe.pdf government_global_economy.pdf entrepreneurship_education_global_economy.pdf chapter3electronic_innovation.pdf Unformatted Attachment Preview Copyright 2012. Cambridge University Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 1 Government: Boss, ­financial partner, ­regulator – Entrepreneurs in mixed economies Nothing has been more important since the beginning of my reign than increasing the prosperity of my people. The introduction of certain new manufacturing industries … enables thousands of my people to gain their bread honorably, the raw material stays in the country … and my subjects can easily pay their taxes. While previously money left the country, it now stays within, making the country richer and more populated. Leopold I, Emperor of Austria (1640–1705)1 We quote Emperor Leopold here because his touching concern for his subjects’ welfare (and their ability to pay their taxes) communicates a clear message: the government needs to play a big role in expanding his country’s economy. Instead of issuing a proclamation encouraging local entrepreneurs to innovate, he instituted an active policy, backed by state funds, to create important new industries. The idea of depending solely on local entrepreneurs to build such industries would not have entered his head. Leopold was neither the first nor, certainly, the last head of state to hold such views. Rulers of his era were well aware that building a country’s economic prosperity had the desirable side-effect of increasing its power in international affairs, and many acted on that realization. In the late 1600s Sir Walter Raleigh observed, “Whosoever commands the sea, commands the trade, whosoever commands the trade of the world commands the riches of the world and consequently the world itself.”2 As a result, the competitive race 1 2 J. Berenger, Histoire de l’empire des Habsbourg 1273–1918 (Paris: Librairie Arthème Fayard, 1990), p. 331. A. Herman, To rule the waves (New York: HarperCollins, 2004), p. 150. 11 EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS AN: 465765 ; Kressel, Henry, Lento, Thomas V..; Entrepreneurship in the Global Economy : Engine for Economic Growth Account: s8501869.main.eds_new 12 Government: Boss, financial partner, regulator to industrialize and sustain national trade advantages was a constant source of international friction, sometimes leading to war. Statesmen have been involving themselves in their countries’ economies for centuries. They know that building and maintaining a healthy industrial base is the key to growing national wealth and sustaining prosperity. They are not about to leave the outcome of this high-stakes game to chance. Naturally, the economic purists who advocate totally free markets are perpetually distressed by this state of affairs. But these purists ignore the lessons of history. Free enterprise cannot prosper without the infrastructure, investments, and rule of law that government provides. Likewise, governments sabotage economic growth – and their global influence in the bargain – when they try to impose too many controls on business, or establish rigid plans for its direction. In other words, government and entrepreneurs need each other. This does not imply that Emperor Leopold’s command-and-control mode of economic planning is a model for our times. Economies have evolved toward more open, mixed systems with complex interplay between the public and private sectors. Entrepreneurs may exploit opportunities to build new companies or industries, but governments still play a major role in charting the overall course of an economy and supporting its growth. The only “pure” systems are failed systems. Plenty of evidence is available to back this up. Historical antecedents National economic development programs have historically relied on several stratagems: • investments in education and infrastructure; • subsidies for exporters; • state funding to help or even create new companies; • erection of trade barriers to limit imports; • establishment of local monopolies or cartels to reduce domestic competition and increase the ability to export. EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use Historical antecedents 13 This is as true for free-market countries as for nations with controlled economies. A nation’s official commitment to free enterprise has never stood in the way of a little cheating to help its preferred industries. For entrepreneurs, such government involvement – or “meddling,” as the purists would have it – is a decidedly mixed blessing. Government influence over the economy can have a decisive impact on the success of individual ventures, and decisions made at the highest levels can foster or stifle entrepreneurial efforts. Problems usually start for entrepreneurs when political leaders are looking to jump-start their country’s industrialization process. Politicians typically believe that national programs to promote rapid industrial development (and exports) work faster than independent entrepreneurial enterprises acting in their own perceived best interests. It follows that the establishment of state-owned corporations to address critical industrial needs has been a recurring theme in countries that are seeking to accelerate their industrialization. Clearly, the heads of these state-owned enterprises are bureaucrats, not entrepreneurs, in the context of our discussion. But real entrepreneurs who build new industries with direct or indirect state help have also emerged in most industrializing countries. Entrepreneurs have learned to live with whatever hand the government deals them and find ways to prosper, which is part of the definition of being an entrepreneur. For example, during Leopold’s reign Austria began producing textiles and arms in privately owned factories. At the start of the process, the country lacked the knowledge and expertise to build and operate these industries. So it set about attracting the talent it needed. Its appeal was simple. The government promised to grant local monopolies, place import restrictions on competitive products, and give business people access to some state capital to establish their industries. These incentives lured experienced entrepreneurs and EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 14 Government: Boss, financial partner, regulator skilled technicians from elsewhere to set up shop in Austria. If you were an entrepreneur, seventeenth-century Austria was a good place to be, not in spite of government meddling, but because of it. England, the birthplace of the Industrial Revolution, may have led the way in the race to industrialize in the seventeenth and eighteenth centuries, but over the next 200 years its increasing prosperity encouraged others to follow its example. France, the US, Germany, Russia, Japan, and other countries industrialized in turn, each at its own pace, and with varying degrees of government oversight and support. Since the 1960s it has been the turn of Asian countries to join the ranks of industrialized nations, and they have done so with a high level of government involvement. These newcomers have learned from history, and have no hesitation in using aggressive national economic strategies to hasten their growth. China, India, South Korea, and Taiwan have all emerged as industrial powers, with exports that compete successfully with the most sophisticated products of the developed world. Their emergence has revolutionized the world economy and trade patterns. China has been the most closely watched of all the Asian success stories, because of both its size and its extraordinary industrial progress. It launched its industrial program in earnest only in the late 1970s, but by 2010 it moved from the back bench to second place in the world economy, displacing Japan. It now has prospects of surpassing even the US. China’s industrialization process has been a forced march, controlled by an omnipotent Communist Party. Individual entrepreneurship has played a minor role. The term “state capitalism” has been applied to the current Chinese model because of its combination of state and private capital. But this policy is actually a modern form of an old system called mercantilism. It should be seen in that context. Early mercantilism Mercantilism has a long history. The term is commonly applied to national economic policies that encourage exports and discourage EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use Historical antecedents 15 imports. The ultimate goal is to produce a trade surplus. Such policies were roundly condemned as long ago as 1776 by Adam Smith in The Wealth of Nations. Smith advocated free trade of complementary products among nations. But as we have already noted, very few statesmen are willing to leave economic development hostage to the vagaries of the free market when vital national interests are at stake. Mercantilism as a policy was widely practiced from the seventeenth to the nineteenth century, particularly as countries with agrarian economies sought to industrialize. It protected fledgling domestic industries from being crushed by outside competition. Governments would provide state support to build locally important industries where the market risk was very low and the technology well established. Once these industries had succeeded in replacing imported products, the state could then promote exports and hopefully generate a trade surplus. Does this sound familiar? It should. Classic mercantilism bears a striking resemblance to policies being pursued by developing countries to this day, including China. Colbert launches modern French industry Mercantilist policy was first deployed on a large scale by Jean-Baptiste Colbert (1619–1683), finance minister of France for twenty-two years under Louis XIV. Leopold I expressed pride in the growing prosperity of his Austrian subjects. Whether Colbert worried much about the welfare of his fellow Frenchmen is highly debatable. What is certain is that Colbert’s big problem was financing the aggressive wars of his king.3 Four years after Louis XIV personally took over the reins of government in 1661, he chose Colbert to rescue France from near 3 For a summary of Colbert’s career and influence, see I. Murat, Colbert (Paris: Librairie Arthème Fayard, 1980), pp. 225–263. EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 16 Government: Boss, financial partner, regulator bankruptcy, mostly brought on by previous military adventures. But this did not stop the “Sun King” from enmeshing France in conflicts of his own making. In the succeeding fifty years of his reign France was involved in three major and two minor wars, creating a nearly constant need for cash. During this era soldiers and foreign allies had to be paid in gold and silver. Since France lacked mines for precious metals, the only way to accumulate bullion was by building a trade surplus, and the structure of the economy made that impossible. French industry was underdeveloped and backward, in the hands of small craft enterprises that simply could not compete in international markets. Colbert decided to fix the problem by building industries such as glass and textile manufacturing. His plan was to restrict competitive imports and promote exports of exceptionally fine products. In this way he could generate a trade surplus that would bring a net inflow of foreign gold and silver into France. Ruthless, determined, able, and in full control of the finances of France, he poached craftsmen and entrepreneurs from various countries by offering highly attractive incentives to set up shop in France. Many of the resulting businesses were granted “Royal Privilege,” which meant that they received state funding, paid no taxes, and were guaranteed government orders for their products. Colbert expected that such new businesses would become independent of state support as their products became commercially successful. But this was a slow process. He was known to complain of continuing demands by entrepreneurs for new funds to cover operating losses. If you were a favored entrepreneur in Colbert’s France, you did very well. Why not hold onto your perks as long as you could? The new companies built large factories with over 1,000 workers – something new in France at the time. Their workers lived in dormitories and were paid minimal wages. The working day was between fourteen and sixteen hours, and the only days off were religious holidays. Colbert complained to the Roman Catholic authorities that there were simply too many of those. EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use Historical antecedents 17 Labor was cheap because France was blessed, if that is the word, with a large population and significant unemployment in its rural economy. Colbert had enough foresight to ensure a continued supply of cheap labor by encouraging early marriages – women were expected to marry before the age of twenty. Having pirated technical expertise from other countries, Colbert worried about losing what our era calls “intellectual property” by the same means. He took draconian steps to prevent it. Once in France, skilled craftsmen could not leave the country. Severe punishments awaited those caught fleeing – from a sentence of rowing in one of the King’s galleys to the death penalty. For Colbert’s program to succeed, French products had to win international customers. To ensure that the new industries produced the highest quality goods, Colbert established a corps of state-funded industrial inspectors who were tasked with checking the quality of products. Delinquent producers were penalized and publicly punished for repeated lapses in quality. At the same time he made sure that the industries he was building were protected from outside competition until they were ready to compete in the international market. For example, the importing of Venetian glass was forbidden in 1672. And woe to the entrepreneur who attempted to evade his trade and quality controls. His technocrats were said to have had over 15,000 small entrepreneurs executed for the crime of importing or manufacturing cotton cloth in violation of French law. Colbert did not limit his attention to manufacturing. He was also anxious to compete with the Dutch in international trade, which they dominated. To that end Colbert promoted the construction of a merchant navy, and gave preference to its ships for French trade. To discourage competitive transport, high fees were placed on foreign vessels visiting French ports. By most measures Jean-Baptiste Colbert was a thoroughly nasty man, widely hated within and outside France. But he launched the country on the path of large-scale industrialization. Under his EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 18 Government: Boss, financial partner, regulator compulsion French industry became renowned for its quality, particularly in such luxury products as silk fabrics, tapestries, and fine glass. In these areas French products came to surpass any goods previously available on the international market. Many famous company names in France date from this era, including the tapestry maker Gobelin and the glass maker SaintGobain. In 1688 a Venetian ambassador wrote that “such is the quality of the French products that they are the best in the world and attract orders from all countries.” Colbert’s policies were successful in at least sustaining the finances of France in spite of the country’s being in an almost continuous state of warfare. Colbert’s basic approach held sway in France for some time after his death. In the eighteenth century French industry benefited from government attempts to attract English technicians and entrepreneurs. France sent agents on undercover missions to England to recruit people and collect commercial secrets, particularly those dealing with production machinery and metallurgical processes. For example, the first English steam engines were secretly imported into France. In 1779 the ice between France and England thawed considerably as the two countries signed agreements allowing the French to import steam engines openly. Bilateral agreements covering other products were also negotiated, but true free trade was far in the future. Entrepreneurs who followed the rules had done well under tight government control, but free trade was something better to look forward to.4 In fact, it was in 1846 that England led the way to a national free-trade policy by removing the restrictive Corn Laws and easing its control of the export of advanced technology. By the 1860s practically all restrictions on imports were gone. At that time England 4 This presentation draws on the wealth of historical information found in J.-C. Asselain, Histoire économique de la France du XVIII siècle à nos jours (Paris: Éditions du Seuil, 1985), pp. 77–105; A. Malet and J. Isaac, XVII and XVIII Siècle (Paris: Librairie Hachette, 1923), pp. 190–194; and Murat, Colbert, pp. 249–261. EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use Modern mercantilism 19 had such a huge industrial lead on other countries that it could afford to be generous and open its market. It did not anticipate that imports would ever threaten domestic industry. Other countries trying to catch up continued to play by more restrictive trading rules – and are doing so still. Modern mercantilism You might ask why we are spending so much time on mercantilism and its history in a book on the modern global entrepreneur. The simple answer is that today’s entrepreneurs operate in a world where governments increasingly control economies, a defining feature of mercantilism over the centuries and one that will not disappear quickly. This reality shapes the economic decisions made by business people and entrepreneurs as they seek markets and business partners in countries with diverse economic agendas. To fully understand its implications, it is necessary to see it in a historical perspective. For the same reason we must also take some time to discuss China, by far the most prominent of modern countries with controlled economies. China has the second largest – and fastest growing – economy in the world. What happens there, in consumer or industrial markets, has a huge impact on the direction of all global business. Industrializing Asia We are witnessing an economic revolution in Asia, affecting billions of people. Countries in that region are striving to industrialize as quickly as possible. Given the pressure to make rapid progress and the top-down structure of many of their economies, it is not surprising that Asian countries would adopt mercantilist methods. Indeed, we are living in the golden age of broadly defined mercantilism. It is currently being practiced in a highly developed form, on a scale unprecedented in history, by China. The world’s most populous country has embarked on a path to industrialization that EBSCOhost - printed on 1/26/2020 1:10 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 20 Government: Boss, financial partner, regulator in some ways mirrors the journey of France under Colbert, using some of the same strategies. Its astonishing success has prompted othe ... Purchase answer to see full attachment