Why Developing Economies Are Not Short of Risk-Takers
A lazy explanation appears whenever development is described as a cultural deficit: poorer countries struggle because people are unwilling to take risks. There is not enough entrepreneurship, not enough venture capital, not enough ambition. The explanation mistakes the kind of risk visible to investors for risk-taking itself. Across many developing economies, people start businesses without meaningful safety nets, trade through unstable supply chains, lend through family networks and keep firms operating through power cuts, inflation, regulatory uncertainty and sudden changes in demand. These are not risk-free lives waiting to be awakened by a motivational seminar. The missing ingredient is often not risk, but a credible relationship between risk and reward. Productive entrepreneurship requires some confidence that successful investment can be retained, contracts can be enforced, failure can be survived and growth will not simply make a firm easier to tax arbitrarily, regulate sele...