How Is Global Entrepreneurship Doing?

Global entrepreneurial activity plunged 25 percent last year reflecting a universal decline in national economic growth, acording to a recent report sponsored by the Kaufman Foundation in Kansas City.

Interest by would-be entrepreneurs to start new businesses dropped sharply last year in all developed countries, according to the 2002 Global Entrepreneurship Monitor (GEM). This study of entrepreneurship and economic growth in 37 countries was conducted by Babson College and London Business School, and funded by the Ewing Marion Kauffman Foundation.

With the exception of the U. S., particularly steep declines were recorded by the G 7 countries, which include Canada (-22 percent), France (-57 percent), Germany (-35 percent), Italy (-42 percent), Japan (-65 percent), and the United Kingdom (-31 percent).

“It appears that the U.S. has stabilized at a level of entrepreneurial activity that will allow us to begin rebuilding or at least maintaining our current position for some time,” said Larry Cox, director of research at the Kauffman Foundation and GEM project director.

According to Paul Reynolds, the GEM project coordinator and a professor at both Babson College and London Business School, the pattern of global decline in entrepreneurial activity mirrors changes in the growth of national GDP (gross domestic product) in the GEM countries between 2001 and 2002.

According to the GEM 2002 study, about 286 million people, or 12 percent of the 2.4 billion labor force in the 37 GEM countries analyzed, are involved in new business formation.

The number of individuals involved in entrepreneurial activity varies sharply from country-to-country. Overall levels of activity are relatively low in Europe, Central Europe and developed Asian countries; moderately high in Latin America and former British Empire Anglo countries (including Australia, Canada, New Zealand, South Africa, and the United States); and highest in the developing Asian countries, where entrepreneurship is more the result of economic necessity.

For more details download the 2002 report from the Kaufman Foundation website.