My biggest surprise was learning that having a captive market for one’s products and services is not enough if the other factors of the economic context are not present. In business school, we take a number of factors for granted, including the rule of law, the efficiency of the market, and the physical and institutional infrastructure that makes capitalism function smoothly. In launching a start-up in a developing country, I learned, much to my surprise, that no matter how much pent-up demand there is for a particular product or service, if the conditions to invest are not favorable, those products and services will not be able to reach the consumer, or if they do, the cost of getting it to them are too prohibitive and risky, no matter how high their willingness to pay.
Realizing that the technology exists to conquer many of the Third World’s problems, but that the infrastructure and policy framework for resolving them are often lacking, is a particularly disappointing finding, especially in the twenty-first century. The cost in terms of missed opportunities and, in the worst cases, extreme human suffering, is prohibitive. Therefore, one major lesson that I have learned is to only target those markets where governments have made a serious commitment to uphold the rule of law, to ensure fair and honest competition, and to invest in their people (e.g., health and education) to create an attractive workforce.
Source: Harvard Business School (HBS) Working Knowledge
Subjects: Economics, International