Policy Brief: Community origins of industrial entrepreneurship

This EDI Policy Brief provides an accessible summary of key insights and findings that are presented in the EDI Working Paper on “Community Origins of Industrial Entrepreneurship in Pre-Independence India.” It derives from a case study on the role community networks in early industrialization in pre-Independence India and in contemporary China.

What are the drivers of industrial entrepreneurship at early stages of development? Formulating policies to foster structural transformation and industrial development in traditional societies requires a good understanding of this. Lessons from the history of advanced and partly developed countries are therefore valuable.

This research and a complementary EDI study on China (Dai, Mookherjee, Munshi and Zhang 2018) illustrate the importance of community institutions. Larger and better-integrated communities offer greater potential for spillovers to policy stimuli, suggesting the role of ‘community targeting’ in industrial policy as a means of raising growth. However, such policies need to be balanced with the potential side-effect of increasing inequality between communities.