How does bankruptcy reform influence the entry and performance of ventures in Japan?
Entrepreneurship is now at the center of many policy questions related to economic growth, employment opportunity, advancement of science and the alleviation of poverty (Ahlstrom, 2010). There is a growing consensus that fostering an appropriate institutional environment is important and affects the dynamic of job growth through new company formation and competition. The question we seek to understand is if institutional changes have the intended effect of creating new and flourishing firms and what are the mechanisms that drive changes in performance of new firms as a result of altering the institutional environment.

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This past Thursday, on the 10th of November 2011, former U.N. Secretary-General, Kofi Annan delivered a speech at Stanford University on the occasion of the launch of the Freeman Spogli Institute for International Studies' Center on Food Security and the Environment. Citing UN estimates, more precisely the UNFPA State of the World Population 2011 report, he highlighted that the world population had recently reached seven billion and growing. Advancements in healthcare and technology have increased our life expectancy, affording 'man' the ability to escape a life that is, in Hobbesian parlance, "poor, nasty, brutish, and short." Yet this apparent human success story eclipses the "shameful failure" of the international community to address an indiscernible fact: that in the contemporary technological age, an astonishing number of people in the world go hungry each day. The marriage of a globalized economy and scientific innovation was supposed to - at least in theory - increase and spread wealth and resources to enhance the human condition. And yet today - talks of unfettered markets and the financial crisis aside -, we lay witness to close to one billion people around the world who lack food security (both chronic and transitory). Citing numbers from the World Bank, Annan stated that rapidly rising food prices since 2010 have "pushed an additional 70 million people into extreme poverty". Adding to these disturbing figures is the fact that one of the world's most ravenous culprits of infanticide is no other than hunger, which claims the young lives of 17,000 children every day.

Dwindling incentives to farm and increasing pressures on farmers are not helping the food insecurity crisis. Frequently, companies who contract local farmers to produce cash crops for export do not employ "strategic agricultural planning" or take into account the impact their policies and modus operandi may have on local farming communities and their immediate (food) needs. Artificially low prices for agricultural goods force farmers from their land and discourage investment in the sector, Annan warns. Agricultural subsidies in the US and Europe against farm produce injected into the market by farmers from developing countries have also added to the problem. Agricultural subsidies in Europe in particular have had a devastating impact on farmers from other parts of the world - mostly in Asia and Africa - who simply cannot compete with the existing market conditions and the low price tags attached to their goods. This phenomenon is most acute in Africa where a significant segment of the population lives modestly by working the land and these subsidies are choking the lifeline that feeds their families. To bring home the point of the sheer imbalance between the conditions of Western farmers and the 'rest', Annan stated that with a fraction of the funds generated by a reduction of subsidies, one "can fly every European cow around the world first class and still have money left over". Without a more balanced approach to international trade policy making, subsidies will continue to be a factor in food insecurity.

And it gets worse. The 'Four Horsemen of the Apocalypse' of our times - (i) an ever emerging global water crisis, (ii) land misuse and degradation, (iii) climate change, and (iv) kleptocratic governance - have combined to aggravate an already dire international food insecurity predicament. The hard truth is that without countering the forward gallop of these ills, food insecurity cannot be adequately addressed.

The facts on the ground and projections into the future do not paint a promising picture. Food prices are expected to rise by 50 percent by the year 2050, Annan warns, and this at a time when the world will be home to two billion more inhabitants. In 40 years from now, there simply isn't enough food to nourish and satisfy the world's population.

The growing world food crisis also stifles development. It is the cyclical brutality of poverty that keeps the hungry down. Without the means or access to proper and adequate nutrition, the impoverished who are always the first victims of food insecurity invariably suffer from poor health, in turn resulting in low productivity. This vicious cycle traps the less privileged to a seemingly inescapable downward spiral.

During the course of his poignant remarks, Annan stated that without addressing food insecurity "the result will be mass migration, growing food shortages, loss of social cohesion and even political instability". He is correct on all counts.

The fact is that a world which 'cultivates' and then neglects the hungry is a dangerous and volatile world. Since time immemorial, dramatic human migrations have had a direct correlation with changes in climate, habitat and resource scarcity. Survival instincts are engrained in our genetic make-up. When the most basic and fundamental necessities of life are sparse and hard to come by, our natural inclination is to look for 'greener pastures'. An unaddressed and lingering food insecurity crisis will mean the world will witness significant and rapid migration trends in the 21st century (a phenomenon very much in motion today). The injection of mass flows of people into other foreign populations will cause friction and conflict induced by integration challenges, both social and economic (surmountable, but conflicts no less).

Moreover, the desperation and unmet basic needs of the underprivileged can translate into open outbursts of conflict and violence. Tranquility and social harmony are virtues enjoyed by countries that can provide for their people. Leaving the growing food insecurity dilemma unaddressed will be to invite inevitable political instability and violence in countries and fragile regions of the world grappling with high poverty rates and concomitant food insecurity challenges. More often than not, history has shown a positive nexus between hunger and social upheaval (it bears noting that La Grande Révolution of 1789-99 was preceded by slogans of "Du pain, du pain!"). Further, it does not take too much of a forethought to recognize that it is precisely in environments of destitute and despondency where autocratic rule can easily take root and grow to inflict further suffering.

Food insecurity can also lead to wars, but similarly wars contribute to food insecurity by destroying both the land and the ability to cultivate the land. Conflict represents formidable barriers to the access and availability of otherwise usable land (countries like Somalia, Sudan, Burundi, Ethiopia and Liberia come to mind).

To be sure, "[w]ithout food, people have only three options: they riot, they emigrate or they die" (borrowed from the often cited words of Josette Sheeran, the Executive Director of the UN World Food Program).

How are we to tackle this grave problem in a realistic and effective manner? Annan rightly tells us that the "[l]ack of a collective vision is irresponsible". Implicit in Annan's remarks is also a lack of leadership to effectively tackle and untie the Gordian Knot of food insecurity. The nature and colossal character of food insecurity demands action and cooperation on a global scale. Climate change and its negative impact on the environment - e.g. diminishing arable lands, water resources, recurring drought -, one of the accelerators of food insecurity, requires robust and committed international agreement and action to reduce the emission of greenhouse gases. Strict adherence and compliance with the Kyoto Protocol and the Copenhagen Accord are a must in this regard. With strategic agricultural planning, knowledge transfer and investment, uncultivated arable lands - abundant in many parts of the world, including in Africa - can become productive and bear fruit, reducing in turn the hunger crisis. Efforts to implement more balanced international trade policies which make farming viable across continents as well as efforts to eradicate corruption (by promoting good governance) are also part and parcel of the fight against hunger. So are innovative ways of thinking about establishing, say rapid response mechanisms to preempt and effectively counter famine and other food emergencies by bolstering the capacities of relevant existing international and regional organizations. We could also reduce the threat of hunger by doing more than just pay lip-serve to the UN Millennium Development Goals (MDGs) and uphold our commitments to the MDGs through sustained funding and support.

The UN and other multilateral bodies and pacts are tools we have created to work collaboratively - as best as human frailties permit - to confront global challenges and ills that threaten the social fabric of human society (whether they be food insecurity, dearth in development, war and the crimes that emanate from aggression which threaten peace and security, inter alia). Our capacity to reason, innovate, communicate and cooperate is hence an indispensible tool in our struggle to keep the peace, to protect our fundamental human rights and to satisfy our most basic needs for survival. It's time to put these faculties to work in confronting the world's food security challenges.

It is only fitting to conclude these brief remarks by quoting from the man and the lecture that inspired them. "If we pool our efforts and resources we can finally break the back of this problem", stated Annan in his call for action to defeat food insecurity. If there's a will, history tells us, change is within grasp, no matter how daunting the task. It only takes the trinity of courage, commitment and leadership.

On October 20, the SPRIE-Stanford Project on Japanese Entrepreneurship (STAJE) hosted a panel discussion featuring venture capitalists and a group of U.S.-Japan experts. The discussion with the title, "U.S.-Japan VC Cooperation and the Fly Over Phenomenon" was moderated by SPRIE Researcher, Robert Eberhart and held at the Stanford Graduate School of Business.

Panelists included Michael Alfant, CEO of Fusion Systems, Martin Kenney, Professor at UC Davis, Allen Miner, Founder of SunBridge, Scott Ellman, CEO of USAsia Venture Partners, Quaeed Motiwala, Managing Director at DFJ JAIC, and William F. Miller, Co-director of SPRIE. They discussed the tendency of U.S. based venture capital firms to fly from Silicon Valley, over Japan, and invest into China.

The panel noted that the reasons usually given by U.S. venture capitalists for the flyover phenomemon is that Japan has obscure accounting, uncertain relief in courts, and too far away to monitor. But since those risks are much larger in China other explanations were needed.  The lack of innovation - i.e. copycat firms -  that flourish in new niches in China are more attractive for VCs than the highly competitive and risky new technologies in Japan. Panelist also suggested that investing cycles are dominated by "fashion" with Japan being out of fashion, and noted the late stage investing pattern in China versus earlier stage investing in Japan and the U.S.  Finally, the panel posed an interesting question for STAJE research that perhaps under certain circumstances protected markets that are now in China might reduce the risks and increase returns for venture capitalists.

In the October 13 seminar entitled, "The Last Mile: Grassroots Development and Technology in Africa” Joshua Stern, executive director of Envaya, and Jesse Young, CTO of Envaya, shared their insights into how software could be used to strengthen grassroots development in Africa. Envaya’s mission is to build and deploy a software platform that provides “the last mile” of connection between grassroots activists and the larger development sector. 

Stern suggested that one of the biggest challenges in the development space currently was the lack of coordination between the community-based organizations, the NGOs and the foundations. He further argued that a system is only as strong as its weakest links. He therefore suggests that it is important to strengthen the weakest links. In the case of Tanzania and many other developing countries, Stern argued that the weakest link was in the connection between the community-based organizations and the international NGOs that often provided critical financial support. The community-based organizations are essential to focus on because they are embedded within the communities they are working in and have institutional memory, and they stay with the communities unlike international organizations and volunteers that come and go.

In Africa, Stern argued, there is a pretty robust grassroots civil society but often people are working on very similar work and do not know one another. Furthermore, organizations have trouble navigating secure funding. There is therefore a huge potential for collaboration. In particular, there is room for greater leveraging technology. Stern argued, “Despite leaps and bounds in hardware infrastructure, software is still tailored to the developed world.” Community organizations have therefore not been able to take advantage of the IT revolution. Envaya fills this gap by providing software that is optimized to work with infrastructure in these localities, thus enabling these organizations to make use of the connectivity that is now becoming available to them.

Josh and Jesse inspired us with the vision of Envaya to provide a technology platform for civil society organizations in developing countries so that communication and collaboration can take place beyond the occasional conference.  Young discussed the technical details Envaya’s innovation that enabled the rapid spread of their platform among the grassroots organizations in Tanzania and elsewhere.

Four decades ago, farmers in Prabhu Pingali’s small eastern-Indian village began planting a new rice variety known as IR8. The high-yielding strain dramatically increased the productivity of rice cultivation in the region. Record harvests and profits allowed Pingali’s family to send their son to school and then to college, launching him on a path that led to his current position as Deputy Director of Agricultural Development at the Bill and Melinda Gates Foundation.

“I think of myself as being here today because of what the Green Revolution did,” said Pingali, speaking at the Center on Food Security and the Environment’s Global Food Policy and Food Security Symposium series.

Pingali’s story, and many others like it, came about as a result of the rapid advances in agricultural technology that characterized the “Green Revolution” of the 1960s and 1970s. Agricultural scientists from the International Rice Research Institute and the International Maize and Wheat Center worked aggressively to bring modern farming techniques, including high-yielding crop varieties, to the developing world.

The first Green Revolution proved that, “innovation, technological change, and just plain old human ingenuity” can overcome seemingly insurmountable obstacles to global food security.

Their efforts sparked a surge in agricultural productivity and incomes that lifted millions of small farmers out of poverty and dispelled widespread fears of famine in Asia’s developing countries. Pingali cited a 2003 study that found that today’s global per capita calorie consumption would be nearly 15 percent lower, and child malnutrition 6-8 percent higher, had the Green Revolution not occurred.

Production surpluses also exerted downward pressure on global food prices, increasing the purchasing power of poor food buyers in both urban and rural areas.

But even direct beneficiaries, including Pingali, acknowledge the Green Revolution’s unintended consequences. “As an Indian, I feel we could have done a lot better.”

Pingali noted that the Green Revolution largely bypassed Sub-Saharan Africa, home to some of the world’s most food-insecure populations. Unlike the developing nations of Eastern Asia, he said, most African countries still lack the market infrastructure to support rapid expansion of the agricultural sector. Low population densities, resulting in weak local food demand, and insufficient government support for agricultural development, have further inhibited productivity gains in these countries.

Additionally, many African farmers rely primarily on minor “orphan” crops, such as cassava, rather than on the global staple grains – rice, wheat, and maize – that received most attention from Green Revolution scientists. Although modern crop breeders have begun to develop high-yielding orphan crop varieties, research in this area remains sparse. Major breakthroughs and significant yield gains may not occur for decades.

Speaking after Pingali, University of Minnesota Professor Philip Pardey reiterated the Green Revolution’s welfare-enhancing consequences. Pardey provided a more rigorous quantitative analysis, presenting data that showed that yields of major cereal crops more than doubled, and real food prices fell by over 50 percent, between 1960 and 2005.

However, Pardey expressed concern about an apparent slowdown in progress since the end of the 20^th century. He cited declining yield growth rates, and the food price spikes of 2008-2010, to emphasize the need for a renewed commitment to agricultural science and food security policy. 

Both Pingali and Pardey also drew their audience’s attention to the unevenness of the Green Revolution’s benefits. The yield gains of the 1960s and 1970s, Pardey said, were accompanied by increasing spatial concentration of food production, as some regions and countries benefited disproportionately from emerging agricultural research.

Even if scientists do develop improved crop varieties for Africa, Pingali said, increasingly stringent intellectual property laws could inhibit their distribution to poor rural farmers. Up until the 1990s, issues of intellectual property had little bearing on agricultural development, permitting the wide distribution of crop varieties. Now the networks that fostered the Green Revolution are in danger of disappearing because of restrictions on the transfer of intellectual property. What was once a public endeavor is increasingly a private concern, and Pingali expressed uncertainty about how private capital should be harnessed to help the rural poor.

Meanwhile, looming challenges such as population growth and global climate change will further complicate the future path of agricultural development.

Like Pardey, Pingali warned against complacency. Though the advances of the 1960s and 1970s were impressive, he concluded, researchers will need to “reach beyond the low-hanging fruit” to continue to increase productivity – intensifying the study of orphan crops, for example, and developing new crop strains that will grow well under extreme climate conditions.

According to Pingali, the first Green Revolution proved that, “innovation, technological change, and just plain old human ingenuity” can overcome seemingly insurmountable obstacles to global food security. Four decades later, agricultural development faces a new round of challenges. Despite these obstacles, Pingali concluded on a note of confidence, arguing that the Green Revolution can overcome problems that currently seem intractable. “We’ve done it before,” he declared, “and I’m sure we can do it again.”