Understanding the entrepreneurial dynamic is vital for countries looking to encourage growth in the quest for economic recovery. The Index tells us where the world stands in terms of entrepreneurial activity and how countries rank against one another. The Index makes it possible to benchmark the nation’s entrepreneurial performance and identify country-specific success factors and bottlenecks.
How entrepreneurial are we?
In this podcast, GEI Co-Developer Professor Erkko Autio explains how the Global Entrepreneurship Index (GEI) is helping governments to develop targeted policy measures. http://helix.imperial.ac.uk/flashcomms/live/mp3/low_res/zgZjxy9B93168390_how_entrepreneurial_are_we_.mp3
So what is the science behind GEI? Previous measures of entrepreneurship were too focused on measuring quantitative outputs such as counts of new business entries, rather than thinking about their quality and potential impact. GEI not only takes quality into account but also considers the context around entrepreneurial ventures. The idea is that a country’s institutional context (e.g., regulatory quality, financial sector, technology infrastructure) regulates the potential of any new venture to generate an economic impact. For example, the same venture could have vastly different performance prospects, depending on whether it is located in Silicon Valley or in Uganda.
The UK is performing well overall but ranks behind Austria and Belgium largely due to it’s ‘bottlenecks’ including a ‘lack of aspiration’ among business founders. During the recent period of economic downturn, conditions for productive entrepreneurship deteriorated slightly (in line with most other countries). GEI shows that the UK’s weak areas of ‘Aspirations’ and ‘Attitudes’ suffered relatively more from the financial crisis than other countries. Significant improvements, Professor Autio argues, ‘could also be achieved through well-targeted policy measures that encourage individuals to invest in start-ups.’
The Index, covering 120 countries, shows how enterprise and economic development are linked, helping governments identify the issues and target weaker areas. David Willetts, Minister for Universities and Science at the time of the 2012 launch event, gave the keynote address. He confirmed that GEI was giving new insights into the UK’s entrepreneurial characteristics which help the Department for Business, Innovation, and Skills (BIS) benchmark performance. However, the UK which shows significant strength in ‘Activities’ such as opportunity start-up, competition, and fearlessness (when it comes to venture failure) – all of which governments should continue to promote. By focusing policy on reducing ‘bottlenecks’ such as Risk Capital, Process Innovation, High Growth, Product Innovation, and Internationalisation, the UK could also make more significant gains than other nations.
The Index is having a direct impact on the design and implementation of entrepreneurship and job-creation policy in both established and emerging economies, helping to identify the drivers and obstacles to entrepreneurial development. GEDI is changing the way we think about entrepreneurship and by focusing on its value for growth it can be used to enhance our worldwide economic development.