As I have been writing a section of my book over the last few days, I thought that the following insight was too valuable to hold for the book… and wanted to share it here with an immediate wider audience. The Four Conceptual Shifts that social networks are bringing are going to have profound effects on country economies. Here’s evidence, from the analysis of Eric D. Beinhocker in The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Beinhocker analyzed the work of William Easterly of the Institute for International Economics and Ross Levine of the University of Minnesota who had conducted a detailed study of seventy-two rich and poor countries and asked “What makes one country richer than another?”
“…the most significant factor was the state of a nation’s Social Technology. The rule of law, the existance of property rights, a well organized banking system, economic transparency, a lack of corruption, and other social and institutional factors played a far greater role in determining national economic success than did any other category of factors. Even countries with few resources and incompetent governments did reasonably well if they had a strong, well-developed Social Technologies. On the flip side, no countries with poor Social Technologies performed well, no matter how well endowed they were with resources or how disciplined their macroeconomic policies were.”
What community leaders of all stripes (local, state, government) should see in this statement is that the opportunity for using social networking technologies can have an even more profound effect for amplifying more general social technologies for supporting entrepreneurs. Clearly community leaders that embrace the adoption of these new tools for supporting their entrepreneurs will win. The entrepreneurs (and communities!) whose leaders ignore these trends will lose out.
Thank you to my colleague Greg Hennessy for bringing Beinhocker’s work to my attention.