Global Entrepreneurship

Questions Why Are Some: People More Entrepreneurial than Others? Organizations More Entrepreneurial than Others? Regions More Entrepreneurial than Others? Countries More Entrepreneurial than Others?

Global Entrepreneurship Monitor (GEM) Any attempt at new business creation (self- employment, new business, expansion of existing business) by individual, team, or established business. Nascent Entrepreneurs Baby-Business Entrepreneurs Adults who have taken some action to create a new businesses of under 3 months old Adults that are owner/managers of firms who have paid wages for 3 – 42 months

Global Entrepreneurship Monitor (GEM) Entrepreneurial activity is higher in low income countries and lower in high income countries. 9.8% of the world's new firms expected to create almost 75% of the jobs. Low/middle-income countries had highest rates of female entrepreneurial activity. The ratio of opportunity to necessity entrepreneurs is significantly higher in high-income countries than in low/middle-income countries

Total Entrepreneurial Activity by Region World Average9.6 South America16.6 North America11.1 European Union5.4 Non European Union Europe5.6 African and Middle East13.0 Asia and Oceania3.4

Entrepreneurship in the US 90% of all firms are small 20 million small firms   1 million new firms yearly   85% of the new jobs 1 in 25 Americans trying to start a business 1 in 8 thinking about starting a business Source of export growth and innovation

Total Entrepreneurial Activity (TEA)

How Many People Are Involved? 37 GEM 2002 countries – –3,882 million people – –2,374 million in labor force age range (18-64 years old) – –62% of world population – –92% of world GDP Estimate 286 million active in start-ups – –205 million in India and China – –18 million in the US – –11.6 million EU + 4 – –4.0 million Eastern European million business entities (2 per start-up) Estimate 460 million active in the world – –Compare to 132 million new human births each year – –More that population of North America (415 million)

CountryAverage2006 TEA2005 TEA2004 TEA Peru40.3%40.2%40.3% China14.0%16.2%13.7% United States11.2%10.0%12.4%11.3% Norway8.4%9.1%9.2%7.0% Mexico7.9%5.3%5.9% Ireland7.6%7.4% 7.7% Switzerland6.7% 6.1% UK6.1%5.8%6.2%6.3% Spain6.1%7.3%5.7%5.2% Austria5.3% France5.3%4.4%5.4%6.0% Denmark5.1%5.3%4.8%5.3% Netherlands5.0%5.4%4.4%5.1% Germany4.7%4.2%5.4%4.5% Portugal4.0% Italy3.9%3.5% 4.3% Belgium3.4%2.7%3.9%3.5%

Number of Entrepreneurs by Country

Key Drivers of Entrepreneurship KEY DRIVERS OF ENTREPRENEURSHIP Financial Support Government Policies and Programs Education and Training Internal Market Openness Commercial, Professional and Physical Infrastructure Cultural and Social Norms R&D Transfer

Why Low Entrepreneurship Activity Financial Support Insufficient overall financial support for entrepreneurship Government financial support more adequate, but could be applied more effectively Government Policies and Programs Low level of government awareness, but time-consuming bureaucracy and inefficient interactions between agencies and entrepreneurs

Low Level of Entrepreneurship (why?) Education and Training Education system does not foster needs of entrepreneurship prepare students to take advantage of business opportunities promote creative or innovative thinking Increase university level courses on entrepreneurship

Low Entrepreneurship Activity R&D Transfer Good R&D being performed, but weak links between R&D organizations and those wanting to commercially implement the developments Internal Market Openness Market is open to new and growing firms, but costs to enter new markets may be beyond the capabilities of new and growing firms

Drivers of Entrepreneurship Commercial, Professional and Physical Infrastructure Excellent science parks and business incubators Increasing entrepreneurship activity Increasing likelihood of new firms succeeding Facilities should be spread evenly over the country Good commercial/professional infrastructure, but cost of access can be beyond new firms

Entrepreneurship Drivers Cultural and Social Norms Entrepreneurship is limited by the national culture Population reluctant to take risks Failed entrepreneurs will not be offered another opportunity

Change in Key Drivers % -10% -5% 0% 5% 10% 15% 20% Financial Support Government Policies and Programmes Education and Training R&D TransferInternal Market Openness Commercial, Professional and Physical Infrastructure Cultural & Social Norms Change in Average Satisfaction Score ( ) Improvement ( ) Deterioration ( ) Change in Key Drivers 2001 – 2004 (The Case of Portugal)

CountryAverage2006 TEA2005 TEA2004 TEA Peru40.3%40.2%40.3% China14.0%16.2%13.7% United States11.2%10.0%12.4%11.3% Norway8.4%9.1%9.2%7.0% Mexico7.9%5.3%5.9% Ireland7.6%7.4% 7.7% Switzerland6.7% 6.1% UK6.1%5.8%6.2%6.3% Spain6.1%7.3%5.7%5.2% Austria5.3% France5.3%4.4%5.4%6.0% Denmark5.1%5.3%4.8%5.3% Netherlands5.0%5.4%4.4%5.1% Germany4.7%4.2%5.4%4.5% Portugal4.0% Italy3.9%3.5% 4.3% Belgium3.4%2.7%3.9%3.5%

Entrepreneurial Activity Outlook (regional basis)

Developed Asian [ Chinese Taipei, Hong Kong, Japan, Singapore] Opportunity Entrepreneurship low Necessity entrepreneurship very low Market expansion entrepreneurship low Women in entrepreneurship relative to men low percent adults small – –See business opportunities – –Know an entrepreneur – –Think they know how to start a business income disparitylow

Eastern European [Croatia, Hungary, Poland, Russia, Slovenia] Opportunity entrepreneurship low Necessity entrepreneurship very low Market Expansion entrepreneurship very low Women entrepreneurship rates relative to menlow Percent adultssmall – –See business opportunities – –Think they know how to start a business – –Some know an entrepreneur Farm sector substantial Income disparitymoderate

European Union + 4 [Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK] Opportunity entrepreneurship moderate Necessity entrepreneurship very low Market expansion entrepreneurship moderate Women in entrepreneurship relative to menlow Adults Many – –See business opportunities – –Think they have start-up skill – –Know an entrepreneur – –Have high fear of failure income disparitylow social security costshigh

Former British Empire (Anglo) [Australia, Canada, New Zealand, South Africa, United States] Opportunity entrepreneurship high Necessity entrepreneurship low Market Expansion entrepreneurship high Women in entrepreneurship relative to men low adults many – –See business opportunities – –Think they have start-up skill – –Know an entrepreneur – –Have low fear of failure income disparitymoderate

Latin America [Argentina, Brazil, Chile, Mexico] Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women : men ratio in entrepreneurship ratesequal Adults many – –See business opportunities – –Think they have start-up skill – –Know an entrepreneur Farm sectorsubstantial High % unemployed < 25 yrs old Income disparityhighest Firm registration barriers highest

Developing Asian [China, India, Korea (South), Thailand] Opportunity entrepreneurship high Necessity entrepreneurship high Market Expansion entrepreneurship high Women approach equality in entrepreneurship rates Many adults – –See business opportunities – –Think they have start-up skill – –Know an entrepreneur Substantial farm sector High % unemployed < 25 yrs old High income disparity Political System – –High levels of corruption – –Weak property rights protection Highest firm registration barriers Moderate VC, informal financing