Economy / Foreign Policy / Politics

Global Entrepreneurship at 30% Capacity?

On Thursday, January 5th, the rankings and numbers for the Global Entrepreneurship and Development Index (GEDI) were revealed at an event hosted by the Heritage Foundation and George Mason University.

Here are the results and GEDI scores

  1. United States 0.60
  2. Sweden 0.57
  3. Australia 0.56
  4. Iceland 0.55
  5. Denmark 0.55
  6. Canada 0.54
  7. Switzerland 0.54
  8. Belgium 0.50
  9. Norway 0.49
  10. Netherlands and Taiwan (tied) 0.48

 

This is the first year of the GEDI that the US has topped the rankings and it came as a surprise to many people. However, this “victory” for the US is not actually a gain. In 2011 the US had a score of 0.64 and only came in 3rd on the rankings. The 2012 GEDI tells a story mostly of losses instead of gains. The US gained the top ranking by losing relatively less than most other counties. Significant findings by the GEDI show a 10% global drop in the drivers of entrepreneurship since 2011. The index also shows that global entrepreneurship has fallen to 30% of its capacity. Those are not very reassuring statistics for our global economy.

 

Zoltan Acs, the creator of the index, explained that the large drops that we see in entrepreneurship are due in many ways to a very large fall in high-growth entrepreneurship. High-growth entrepreneurship is driven by dynamic and quickly growing multi-million dollar companies. Acs points out that many of the more dynamic and exploding asian countries do not break the top ten because their entrepreneurship is based mostly on thousands of small start-ups and few lasting high-growth multi-million dollar companies. The GEDI takes into account three major entrepreneurship factors on the national level. Attitude towards entrepreneurship, activity of entrepreneurship (what type), and entrepreneurial aspirations. Each country’s score depends on its combined performance on all three categories. One of the large benefits of the study is that it shows the areas where each country needs to improve. These areas could act as a starting point for new policy and institutional reform which can lead to more dynamic entrepreneurship and growth.