The hindering factor
SAAD PARVEZ
A creative person striving for some innovation is always lost in the reveries of the eureka moment. He foresees a day when he is successful to establish some economic unit and is always passionate about doing it. He wants to do it for profit, people and the planet. Peace and tranquillity are the fundamental prerequisites for successful innovations, whereas entrepreneurship is a key driver of economic augmentation and employment which eventually leads to the development of a region or a nation. Does innovations and entrepreneurship under fire contribute to economic development and growth? Macro evidence consistently shows that any form of conflict in a region is a critical obstacle to growth and development. Based on rich microdata that allows us to disentangle the heterogeneous effects of conflict on different types of private entrepreneurial activities (PEA), it is suggested that entrepreneurship under fire does not contribute to economic development.
Creativity requires deep thinking and analysis of a problem to obtain the right ideas. Among various factors that affect logical thinking, serenity and peace of mind are the important components for idea inception and idea development. Pristine social and political conditions as well as a positive ecosystem around an innovator boost his capability of logical thinking and finds a greater chance of achieving the eureka moments. Violence and conflict hamper development and growth and reduces the incentives for investments and entrepreneurship and in turn, lower output and employment. Fragile and conflict-affected regions enter a vicious cycle of decreasing private entrepreneurial activities, decreasing labour demand, decreasing labour supply, and further narrowing of entrepreneurial activities. How does one reconcile the virtuous effects of private sector development, with the negative relationship between growth and conflict at both macro and micro levels, along with the evidence of resilience and increased entrepreneurial activities under conflict? Generally, in conflict-affected regions of the world, increased conflict induces a rise in low-value-added entrepreneurial activities and a decrease in higher value-added activities as a result the conflict rewinds the process of structural change. The literature in this context has revealed that due to the resilience of entrepreneurial activities under conflict, the private entrepreneurial activity increases in areas of higher conflict. However, there is a mark of reduced income opportunities, rather than other way around. Higher conflict intensity shifts households away from employment to low capital self-employment activities and agricultural sales whereas self-employment with higher capital content, instead, decreases in high conflict areas. It was also found that the increase in low capital self-employment is stronger in high conflict areas. Evidence also suggests that conflict pushes households towards marginal self-employment activities and towards agriculture, although a few households do gain from opportunity bases business as per by the famous Wall Street quote, “Money is made when there is blood on the streets”.
The hegira of people due to conflict also reduces the opportunity of successful Innovations and producing entrepreneurs of class, as creative people generally look for better space and opportunities to culminate their creative ideas into logical conclusions. As a result, the advantage generally goes to the region where they strive to do so. Further, in a conflict zone, the support and patronization of creative people, which should be given from the relevant authorities and society as a whole, is totally missing as they become blind to their journey. One needs to understand that entrepreneurs ultimately create economic units and these economic units’ leads to a better standard of living and human satisfaction. Hence, a new model for innovations and entrepreneurship development in conflict zones need to be worked out for the survival of the economy in such regions.
The author is the head of IIED Centre, NIT Srinagar
