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Measuring Entrepreneurship Around the World

Jonathan Ortmans, President, Public Forum Institute

Jonathan Ortmans I returned this weekend from the Aspen Institute’s annual meeting of development entrepreneurs in New York where fresh thinkers were hard at work looking for new approaches to impactful international economic development. USAID Administrator Dr. Rajiv Shah sought out the opportunity to present his new vision for his agency, and Carl Schramm, President of the Kauffman Foundation, challenged the traditional strategic and intellectual platform that has driven the tired policies of decades of Washington consensus thinking around how we stimulate global economic growth.

As I listened to discussions at the ANDE meeting, it became clear to me that my assumption that we all agreed on the importance of young startups as the primary drivers of economic growth and poverty reduction was one not commonly held. That, along with there being a keen interest among ANDE members in focusing now on “measuring impact” over messy, experimental “entrepreneurial capitalism” leads me today to post on one of my favorite topics – our common progress (or lack thereof) in “measuring entrepreneurship” around the world.

As it happens, the SBA just released a new study that analyzes entrepreneurship at the global level using a new index called the Global Entrepreneurship and Development Index (GEDI). This index captures the contextual (qualitative and quantitative) features of entrepre¬neurship in 71 countries. This new study by Zoltan J. Acs and Laszlo Szerb is noteworthy because it seeks to present a comprehensive measure of entrepreneurship by drawing on more than a dozen existing measures of economic freedom, competitiveness, and entrepreneurial activ¬ity, such as the Heritage Foundation’s Index of Economic Freedom, the OECD, Transparency International, the United Nations, UNESCO, the World Bank, the World Economic Forum, the Global Entrepreneurship Monitor, many of which I use as trusted sources to get an idea of a country’s entrepreneurial environment for my posts.

The GEDI focuses on three broad areas, which form sub-indexes: entrepreneurial attitudes, entrepreneurial activity, and entrepreneurial aspirations. I find this last sub-index the most interesting. It measures how much of the entrepreneurial activity in a country is being directed toward innovation, high-impact entrepreneurship, and glo¬balization. I hope this will allow for more learning from the models and strengths and weaknesses of the most high-impact entrepreneurship ecosystems.

Who ranks at the top according to the new GEDI? Denmark and Canada appear at the top of the overall rank. The United States ranks third on the GEDI overall, but first on the entrepreneurial aspirations sub-index. From correlation analyses, the study findings sug¬gest moving away from simpler measures of entre¬preneurship across countries, which yield a U-shaped or L-shaped relationship between entrepreneurship and economic development, to more complex mea¬sures, which are clearly positively related to development.

Data can yield important implications for development policy. That is why developing better data needs to be part of any long-term strategy for advancing better research and policy on entrepreneurship and innovation. I encourage readers to check Kauffman’s Data Maven site, a blog where you can find analysis on new data developments and current projects to improve our ability to capture entrepreneurship. Stay tuned also at www.unleashingideas.org where Global Entrepreneurship Week in mid November will report on policy gatherings across the globe that discuss this paucity of data.

In the meantime, I leave you today with my list of sources of international data on entrepreneurship:

European Commission Survey on Entrepreneurship/ Eurobarometer

The survey on entrepreneurship is about peoples' entrepreneurial mindset. It examines the motivation, choices, experiences and obstacles linked to self-employment. The results help EU policy makers to understand problems and develop future policy responses."

Gallup

Results are based on face-to-face interviews with at least 350 adults, aged 15 and older, in Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, the Palestinian Territories, Saudi Arabia, Tunisia, the United Arab Emirates, and Yemen from June 2006 to September 2007. In the United States, the poll was conducted with 302 adults, aged 15 and older, in August 2007. In France, Germany, and the United Kingdom, the polls were conducted with at least 240 people, aged 15 and older, in December 2006.

Index of Economic Freedom

Measures ten components of economic freedom, assigning a grade in each using a scale from 0 to 100, where 100 represents the maximum freedom. The ten component scores are then averaged to give an overall economic freedom score for each country.

Legatum Prosperity Index

The Prosperity Index comprises 79 different variables organized into nine sub indexes – each identified as a foundation of long-term prosperity. A country’s performance in each sub-index is given a score, and the overall Prosperity Index rankings are produced by averaging the scores of the nine sub-indexes for each country.

OECD-Eurostat Entrepreneurship Indicators Programme (EIP)

The OECD launched the Entrepreneurship Indicators Programme (EIP) in 2006 in order to build internationally comparable statistics on entrepreneurship and its determinants. In 2007, Eurostat joined forces with the OECD to create a joint OECD-Eurostat EIP, and work began with the development of standard definitions and concepts as a basis for the collection of empirical data.

World Bank Business Planet - Enterprise Survey

Data on more than 70,000 firms in 104 countries containing information on firm characteristics, business perceptions, and indicators on the quality of the business environment.

World Bank Business Planet - Entrepreneurship

Measures of entrepreneurial activity are calculated from data collected directly from registrar of companies on the number of total and newly registered corporations.

World Bank Doing Business Indicators

Provides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level.

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

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