Entrepreneurship falters in the US and Europe

The number of new businesses launched in the US fell in 2006 compared to the previous year, with the weak housing market taking some of the blame. This was one finding in the annual Global Entrepreneurship Monitor, which looks at start-up activity across more than 40 markets.

by Global Entrepreneurship Monitor
Last Updated: 23 Jul 2013

The percentage of people in the US who had just started a new business or were thinking of doing so fell from 12.4% to 10%. The figure in Germany was down from 5.4% to 4.2% and in France from 5.4% to 4.4%.

By contrast the percentage of Chinese starting or planning a new business grew from 13.7% to 16.2%, while Peru was at the top of the table with 40.2%. Generally, middle-income countries had higher start-up rates than richer countries. But the start-up rate tends to increase again in the very richest countries as people's economic confidence encourages more risk-taking, said executive director of GEM, Rebecca Harding.

Not surprisingly, the US has a higher early entrepreneurship ratio compared to other high per capita income countries. Belgium was at the bottom of the start-up league at 2.7% of the population.

The monitor also collects data on business ownership. Established business ownership rates were lowest in Russia, France and the United Arab Emirates, and highest in Thailand, Indonesia and the Philippines.

Russia, as a middle-income country, bucks the pattern of higher business ownership and start up ratios, appearing to have moved from communism to oligarchy without establishing the legal norms and business infrastructure necessary for entrepreneurs to flourish. The USA stands above Japan and most of Europe but behind Spain, Norway, the Netherlands and Iceland in business ownership rates.

Global Entrepreneurship Monitor 2007

Review by Joe Gill

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