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Growth, Entrepreneurship Studied

November 22, 2000|Marla Dickerson

A new study of global entrepreneurship shows that rates of entrepreneurship vary markedly between nations, with the most entrepreneurial posting high rates of economic growth.

That might seem like common sense, but the relationship is a critical one to governments interested in boosting growth and development in their nations. It's also complex to measure, which is why Babson College and the London School of Business set up a joint research initiative called the Global Enterprise Monitor (GEM) to figure out what makes nations entrepreneurial and whether it matters.

Some of the latest GEM research on 21 developed countries shows:

* Levels of entrepreneurship differ markedly among nations. Think Silicon Valley is a start-up hotbed? Try Brazil, where one in eight adults is currently starting a business. The United States is runner-up with one in 10 pursuing a start-up, followed by Australia at one in 25. Ireland and Japan trail the pack with only one in 100 adults attempting to launch a business.

* Entrepreneurship is strongly associated with economic growth. There are some exceptions, such as Ireland, whose economy is sizzling despite its relative dearth of entrepreneurs. But every country that demonstrated high levels of entrepreneurial activity likewise posted above-average economic growth.

* Most entrepreneurs continue to be young and male. Despite gains made by women in nations such as the United States, men overall are still twice as likely to be involved in entrepreneurial activity as women. They're also more likely to start a business between the ages of 24 to 35. Getting more women and older men involved could be critical to maintaining the economic health of aging, developed nations.

* Capital and entrepreneurship go hand-in-hand. Do the math. Formal venture capital invested in 1999 equaled 0.52% of GDP in start-up crazy America and only 0.022% in laggard Japan.

* Education matters. Nations with high levels of entrepreneurship also had high levels of participation in post-high school education.

For a copy of the 2000 GEM study, go to the Web site of its sponsor, the Kauffman Center for Entrepreneurial Leadership, and click the GEM icon in the top right corner.

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