Policies to carry out entrepreneurial activities, provide employment, and produce

The problem of productivity in Latin America has to do with strengthening the employability conditions of the labor force, and the generation of employments. Public policies must have a multi-dimensional approach to address this problem.

On the one hand, many young people who reach adolescence decide not to continue studying and they join the informal labor force, frequently generating their own entrepreneurship, as the prospects of a quality formal job are very low. Unfortunately, when making this decision they little by little deteriorate their capacities to get a good job. On the other hand, the lack of growth of the new and existing enterprises is due no only to the adverse conditions of access to financing and technology, among others, but rather to the fact that many of the available workers offer limited capacities both in technical skills and basic working habits. Thus, the region is in a sort of informality and low productivity trap, where enterprises do not grow because, among other things, the labor force is low-skilled and this, in turn, is a result of the fact that there are not enough transforming enterprises that generate working opportunities to discourage informal micro-entrepreneurship. 

To promote productive and sustainable entrepreneurship, public interventions must have a multi-dimensional approach and must integrate entrepreneurial and working talents with innovation and financing. At the same time, the promotion of certain inexistent markets and access to financial services may be important for the development and growth of quality enterprises. This also applies to entrepreneurships throughout the whole spectrum, from those whose maximum potential is to create a few quality jobs for the local market, to those that may eventually compete in international markets. Policies need to consider the importance of programs that reduce the transition of young people from the educational system to jobs in the informal sector, not only for reasons of social inclusion, but also for the growth and productivity of the formal sector. 

To read more about entrepreneurships in Latin America, download the 2013 RED here.