Uncorking Enterprise

This article explains the need for entrepreneurship in the battle against unemployment around the world. There is a great pressure on policymakers to promote the creation of new businesses. This has especially come to light in the recent Egyptian revolution, which is in part due to the high (33%) unemployment in the nation. The main reasons given for promoting new businesses are that they create jobs that did not exist before, and that new firms are the most likely to increase productivity.

Recently, the Global Entrepreneurship Monitor (GEM), a new index created by various academics, has been used to judge how favorable and friendly different nations are to entrepreneurship. This index focuses on business creation, but the problem is that it does not distinguish between new companies that will have a big impact and smaller companies that will not have an impact, such as street vendors.

Another index that is being unveiled today, is the Global Entrepreneurship and Development Index, which takes into account high growth companies, ambition, and prevalence of start-ups. The interesting result of this index is that it shows bottlenecks in a nation's economic or financial systems. For example, even though Britain is developed, there is a shortage of venture capital and therefore it is not so conducive to entrepreneurship. The other interesting preliminary result of the index shows that many of the scandinavian countries are in the top ten, which indicates that it is possible to have a welfare state that promotes entrepreneurs.

This article was very enlightening, and it shows how a country could improve some economic problems by promoting entrepreneurship and reducing the cost of opening a business. The new indices measuring this variable are just beginning to be used, but there is hope that they will be able to shed some light onto what makes a country favorable towards entrepreneurs.