When entrepreneurship can be a public good

My friend Fouzul Kabir Khan's recent book, "Win: How Public Entrepreneurship Can Transform the Developing World", has brought back an issue critical to the development discourse in these pandemic times. The preceding four decades has seen several discourse upheavals—the disintegration of the Soviet Union at the end of the 1980s and the ensuing shadow over the "socialist project", the false triumphalism of the "free market" paradigm a la Fukuyama's "End of History" of early 1990s, the rude awakening from the perils of unbridled "crony" capitalism a la the crash of 2008 and the most recent Covid-19 pandemic upending many established ideas of development, roles of the state and the market, and the intersectionality of growth, health and environment. The ideas of one master from the past—Joseph Schumpeter (1883-1950), fleeting finance minister of post WW1 German-Austria and later Harvard economics professor—merit new attention. Schumpeter is righty remembered as pioneering the ideas of entrepreneurship and innovation as drivers of economic transformation. Since then, both of these central ideas have been narrowly appropriated by the high priests of private capital and their assorted knowledge partners for everything from economic transformation—Schumpeter's own original focus—to sustainable development and even the task of saving the planet. But is entrepreneurship and innovation only a matter of the "private sector"? And who indeed counts in the "private sector"? How well do politically-empowered business elites of today whose major entrepreneurial "skill" lie in gaming the policy world for private benefits conform to Schumpeter's ideal of the "entrepreneur"?

Fouzul's book has done a service in shining a spotlight on the importance of the link between the idea of entrepreneurship and the idea of "public good". It is a link which has assumed all the more urgency in these pandemic times when vaccines have simultaneously highlighted the need for entrepreneurial innovation and for the fruits of this innovation to serve a greater public good. Howsoever market fundamentalists and their knowledge enablers may argue, investing such meanings into Schumpeter's conceptual breakthrough does not negate economic "science". It only re-affirms the true calling of economics as a social science, an identity re-discovery made all the more urgent by the existential nature of the pandemic impact.

In the amoral world of crony capitalism, the "good entrepreneur" faces an uphill task vis-à-vis the crony-powerbroker nexus which straddles both the private sector and the state. The big message from Fouzul's book is that the "good entrepreneur" need not only be in the private sector. It can also be in the public domain. The book centres around the case of the Infrastructure Development Company Limited (IDCOL), a government-owned company established in 1997 which has been instrumental in bringing much of rural and remote Bangladesh within the ambit of electricity through innovative financing of the spread of solar home systems (SLH). Fouzul Kabir Khan had first-hand insights as the first and longest-serving CEO (1998-2007) of IDCOL and is able to give an in-depth and authentic account of how a "public entrepreneur" came into being and was able to deliver a valuable and an innovative public good. The qualities of "good entrepreneurship" that he pinpoints are as relevant to the private entrepreneur as to the "public" entrepreneur—clarity and enforcement of regulatory frameworks, focus on and incentivising merit among staff, zero-tolerance for corruption, personal example-setting by top leadership, willingness to work with partners to achieve larger goals.

The obverse of his insights is that in the absence of these features, "public entrepreneurs" can be set up but are unlikely to deliver public good. Such examples unfortunately also abound. Just as in the case of the "good entrepreneur" in the private sector, it is the crony-powerbroker nexus and the culture of rule-breaking and conflicts of interest that flows from it that stands against entrepreneurship becoming a driver delivering public good. Yet, the IDCOL lesson has new resonance in these pandemic times. Public entrepreneurship is a transformational pathway that developing countries like Bangladesh should carefully consider with urgency. Preceding IDCOL, the Local Government Engineering Department (LGED), though a regular department rather than a publicly-owned company, established a commendable track record of public entrepreneurial skills under the dynamic leadership of the late QI Siddique, to achieve the first connectivity revolution of Bangladesh a la the feeder roads that connected villages with towns and transformed Bangladesh into a connected national economy. The potential clearly is there but it will require decisive action from top leadership against the entrenched crony-powerbroker nexus that stands in the way of "good entrepreneurship" flourishing both in the private and public domains.

One immediate focus of decisive action should, no, must be the revival of the public sector entity which has a strong and credible track record of vaccine production, namely the Institute of Public Health (IPH). This was an indispensable support institution for the expanded EPI programme which was instrumental in bringing down child mortality. While we scramble to procure vaccines against Covid-19, building a national capacity for such production has to be a priority. It will be a pity here if policy thinking prioritises only private sector capacity for such national production. The goal is not just about national production but its link to public good. Private companies may very well enter into such vaccine production. But the state's focus must equally be on building a parallel public sector capacity especially because in IPH it already has a history to fast-track an initiative. The budget has kept a block amount of Tk 10,000 crores for Covid response. I call upon the finance minister to allocate an appropriate amount from this block allocation to jump-start the new journey of IPH as a public entrepreneur. If the finance minister makes an explicit and specific declaration to this effect at his closing speech at the approval of the proposed budget at the end of the month, it will signal the government's seriousness on its vaccination strategy and strike a big blow for "good entrepreneurship".

Hossain Zillur Rahman is an economist and Executive Chairman of the Power and Participation Research Centre (PPRC).