Session Title:
Pre-conditions, Limitations & New Models
Pre-conditions, Limitations & New Models
Date of talk or publication:
2005
2005
Speaker Name / Title:
Bruce Scott & William Nash
Bruce Scott & William Nash
Organization:
Harvard Business School & Council on Foreign Relations
Harvard Business School & Council on Foreign Relations
Description:
In December 1995 NATO troops entered Bosnia to enforce the Dayton Peace Accords. Almost immediately they insisted that all barriers to free movement along the highways be removed and established a checkpoint to monitor traffic on the major north-south highway, which was renamed Route Arizona. This largely defensive step would soon set in motion a series of developments that would transform the checkpoint into a self-sustaining market and a rural area into a bustling site of commercial activity. The decision to nurture the Arizona Market was made when the local commander noticed that Bosniacs, Croats, and Serbs were using the roadblock as a meeting point for “interethnic” gatherings. Soon cigarettes were being sold, then other items, and within a few days coffee. Over time the Arizona Market grew from an informal, wide spot in the road into a rough and tumble market with off road parking that drew buyers from more than a hundred mile radius and merchandise from much greater distances. By 2005 it comprised an estimated 2,000 small retail establishments covering some 300 acres and stretching for approximately half a mile.
What lessons might a private sector entrepreneur draw from this experience? Although the NATO commanders had some forms or power not available to most entrepreneurs, namely, to command tanks and troops and call in air support, entrepreneurs have some powers that are similar to those of an army commander. They have, for example, command of a hierarchy of skilled personnel, equipment at their disposal, and a budget that permits needed expenditures. They also have within themselves and their organizations the analytic capabilities and capacity to coordinate groups of people. Beyond this, many entrepreneurs have powers not available to the NATO officers. Whereas the Army officers, being routinely rotated through specific commands on rather short assignments, had little prospect of seeing the fruits of the risks they took to nurture the Arizona Market, an entrepreneur might easily be in a position to command resources for projects that benefit a local community for a decade or perhaps two. The common starting point is recognition of the need for coordination to correct an imperfection in the framework of laws and institutions that shape a local context. In developing countries, such institutional gaps are the rule, not the exception. Public goods such as roads and schools are in short supply, as is law enforcement. Entrepreneurs can act to reduce or even close such gaps. A second advantage entrepreneurs enjoy over military commanders is that they can attempt to create coalitions with fellow entrepreneurs in similar or even different lines of business to help plan and finance improvements in local circumstances unconstrained by a chain of command. The Arizona Market is a suggestive model of how entrepreneurs can facilitate economic development in ways that impersonal markets cannot match.
In December 1995 NATO troops entered Bosnia to enforce the Dayton Peace Accords. Almost immediately they insisted that all barriers to free movement along the highways be removed and established a checkpoint to monitor traffic on the major north-south highway, which was renamed Route Arizona. This largely defensive step would soon set in motion a series of developments that would transform the checkpoint into a self-sustaining market and a rural area into a bustling site of commercial activity. The decision to nurture the Arizona Market was made when the local commander noticed that Bosniacs, Croats, and Serbs were using the roadblock as a meeting point for “interethnic” gatherings. Soon cigarettes were being sold, then other items, and within a few days coffee. Over time the Arizona Market grew from an informal, wide spot in the road into a rough and tumble market with off road parking that drew buyers from more than a hundred mile radius and merchandise from much greater distances. By 2005 it comprised an estimated 2,000 small retail establishments covering some 300 acres and stretching for approximately half a mile.
What lessons might a private sector entrepreneur draw from this experience? Although the NATO commanders had some forms or power not available to most entrepreneurs, namely, to command tanks and troops and call in air support, entrepreneurs have some powers that are similar to those of an army commander. They have, for example, command of a hierarchy of skilled personnel, equipment at their disposal, and a budget that permits needed expenditures. They also have within themselves and their organizations the analytic capabilities and capacity to coordinate groups of people. Beyond this, many entrepreneurs have powers not available to the NATO officers. Whereas the Army officers, being routinely rotated through specific commands on rather short assignments, had little prospect of seeing the fruits of the risks they took to nurture the Arizona Market, an entrepreneur might easily be in a position to command resources for projects that benefit a local community for a decade or perhaps two. The common starting point is recognition of the need for coordination to correct an imperfection in the framework of laws and institutions that shape a local context. In developing countries, such institutional gaps are the rule, not the exception. Public goods such as roads and schools are in short supply, as is law enforcement. Entrepreneurs can act to reduce or even close such gaps. A second advantage entrepreneurs enjoy over military commanders is that they can attempt to create coalitions with fellow entrepreneurs in similar or even different lines of business to help plan and finance improvements in local circumstances unconstrained by a chain of command. The Arizona Market is a suggestive model of how entrepreneurs can facilitate economic development in ways that impersonal markets cannot match.
