Sunday, 31 May 2015

Why do managers in the DRC choose their industry?

Why do business people in the DRC choose their industry?  The motivation of business people has long been a topic debated by economists.  People could go into an industrial sector because they think it is an exciting area to work in, or because they think it offers the best opportunities to make money.  What people think has policy implications - for example, if a government wants people to work in a certain industry, then reducing taxation or providing incentives in it will work best if people move around easily in pursuit of the highest revenue.

Recent data from the DRC points to the major importance of personal aspirations when senior managers choose their industry:

Nationally, almost half of them are motivated by personal aspirations, and under a quarter say that expectations of high profitability drove them.  That's not to say that the money isn't important, but it isn't their primary motivation.  Over a quarter say that they followed the path of a relative or friend, indicating the importance of personal ties or learning.

These responses suggest that if the DRC wants to attract people into an industry, the starting policy shouldn't be sector-specific tax cuts or investment incentives.  These can be expensive to apply and administer, and are also given to people who would go into the industry anyway.  Instead, effective measures would be advertising the industry, providing information about it, facilitating entry by training and apprenticeships, and supporting people's advancement.

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