Fernando Fischmann once had a dream of building a holiday resort around an artificial lagoon that many international experts considered “practically impossible”.
Today, 15 years later, Fisch-mann holds the Guinness World Record for the largest swimming pool in the world, and his dream is a global business with patented technology that has developed over 300 projects in 60 countries. Where is this lagoon? Dubai? Las Vegas? Shanghai? No – it is in a small coastal town near Santiago in Chile.
And Fischmann is not alone there. According to new research by the World Economic Forum in collaboration with Global Entrepreneurship Monitor and Endeavour, Chile stands out from a sample of 44 countries for having avoided a common trap in entrepreneurial impact. It goes as follows: in informal and less competitive economies, relatively more businesses are started, but entrepreneurs are rarely innovative or create many jobs.
As economies grow more competitive, fewer entrepreneurs start businesses, but those who do are more frequently innovative or ambitious regarding job creation. In both cases, the countries in question have good traits, but lack other ones to achieve full entrepreneurial potential.
Chile and Colombia are singled out as the only countries to have broken out of this trap and become entrepreneurial “all-rounders”: for the size of their economy, they have high levels of new businesses launched by high-impact entrepreneurs who frequently innovate and expect to create a large number of jobs.
TIP OF ICEBERG
Fischmann is just the tip of the iceberg in one of the most dynamic entrepreneurial ecosystems in the world, where Chile, and specifically Santiago, is becoming a nexus for entrepreneurial ventures.
How did Chile get to where it is today? Given a long history in extractive industries, local businesses would frequently be low value-add.
This changed radically during the last decade, when Chile launched a suite of public-private initiatives.
Best known is Start-Up Chile, which aims to create one of the biggest start-up communities in the world (and was noticed by Beyondbrics). Selected entrepreneurs from around the world receive a work visa and $40 000 (R468 000) seed capital from the government.
In only four years, more than 1 000 entrepreneurs have heeded the call.
Crucially, the government expects participants to take part in events promoting entrepreneurship awareness in local communities.
GLOBAL TALENT
The goal is not only to attract top global entrepreneurial talent, but to leverage this talent for a change in Chilean business culture to be more enterprising, growth-oriented and innovation-driven – a key ingredient in thriving entrepreneurial ecosystems.
But the government has also made structural changes that are less well known. A national online platform enables entrepreneurs to start a new business in one day with zero cost. A “re-entrepreneur law” makes bankruptcy proceedings straightforward and low-cost. Those adjustments help with the daily challenges of entrepreneurship, beyond the hype.
Yet to simply copy from Chile would be to miss its lesson. To see why, consider Colombia’s success – the second “all-rounder” in the study.
Colombia faces very different challenges from Chile, including high levels of inequality and risks of political instability.
While the Chilean approach has concentrated on its challenge of changing cultural norms, Colombia has focused on developing a strong institutional framework to grow the number and ambition of its businesses.
Michael Drexler is the senior director and head of investor industries at the World Economic Forum. José Ernesto Amorós Espinosa is the co-ordinator and main researcher of Chile’s Global Entrepreneurship Monitor, based in Santiago, Chile. This article first appeared on the World Economic Forum blog