Global Variations in Growth Ambitions Donna Kelley, Babson College 7 th Annual GW October Entrepreneurship Conference World Bank, Washington DC October 13, 216
Wide variation in entrepreneurship rates 45 Total Entrepreneurial Activity 4 35 3 23.5 25 2 15 13.2 8.6 5 Algeria Egypt India Libya Iran Vietnam Philippines Angola Cameroon Ghana Bolivia Malawi Burkina Faso Botswana Uganda Senegal Nigeria Zambia Suriname Malaysia Bulgaria Kosovo Morocco Russia Macedonia Belize Georgia Bosnia and Herzegovina Croatia Hungary Poland South Africa Tunisia Romania Kazakhstan Lithuania Costa Rica China Panama Thailand Jamaica Latvia Uruguay Argentina Guatemala Indonesia El Salvador Barbados Brazil Mexico Peru Colombia Chile Lebanon Ecuador Japan Germany Italy France Denmark Norway Spain Slovenia Belgium Finland Greece United Kingdom Netherlands Sweden Switzerland Taiwan Czech Republic Puerto Rico Austria Ireland Korea, Republic of Portugal Slovakia Luxembourg Singapore Israel United States Australia Estonia Trinidad and Tobago Canada Qatar
But also in growth ambitions 6 6 or more jobs projected in 5 years (% TEA) 5 4 3 16.3 2.7 23.2 2 Malawi India Zambia Vietnam Philippines Uganda Ghana Burkina Faso Algeria Cameroon Bolivia Iran Senegal Angola Egypt Nigeria Botswana Libya Panama Indonesia Jamaica El Salvador Brazil Bulgaria Suriname Malaysia Thailand Ecuador Mexico Lebanon Barbados Guatemala Peru Morocco Costa Rica Kosovo Argentina Belize Georgia Macedonia Russia South Africa Uruguay Poland Croatia Latvia Hungary Bosnia and Herzegovina Chile Lithuania Kazakhstan China Romania Tunisia Colombia Greece Italy Spain Puerto Rico Luxembourg Austria Korea, Republic of Norway Sweden Portugal Finland United Kingdom Switzerland Belgium Slovenia Germany Netherlands Denmark Israel Canada Czech Republic Slovakia Australia Estonia France United States Trinidad and Tobago Ireland Taiwan Japan Singapore Qatar
Factor-Driven Low TEA: Egypt and India 12 8 6 4 Low opportunity motives Low on WEF GCI macroeconomy, labor, finance High on World Bank Starting a Business 2 Egypt India % TEA 6+ jobs in 5 years Increasing opportunity motives Low on World Bank Starting a Business % TEA -5 jobs in 5 years
Factor-Driven High TEA: Malawi and Botswana 35 3 25 High corruption (TI CPI) Low on World Bank Starting a Business Low on WEF GCI macroeconomy 2 15 5 Malawi Botswana % TEA 6+ jobs in 5 years % TEA -5 jobs in 5 years Low corruption High on WB Doing Business High on WEF GCI macroeconomy and labor
Efficiency-Driven Average TEA: China and Thailand 16 14 12 8 6 4 High opportunity motives High established business activity High WB Doing Business Below average opportunity motives Somewhat low on WB Starting a Business High on WEF GCI macroeconomy, labor and business sophistication 2 China Thailand % TEA 6+ jobs in 5 years % TEA -5 jobs in 5 years
Efficiency-Driven High TEA: Brazil and Colombia 25 2 15 5 Moderately high on WB Doing Business and Starting a Business Low on WEF GCI institutions but high on macroeconomy and finance Low opportunity motives Low on WB Starting a Business Somewhat low on WEF GCI institutions, macroeconomy and labor Brazil Colombia % TEA 6+ jobs in 5 years % TEA -5 jobs in 5 years
Innovation-Driven: Italy and Greece vs. Ireland and Estonia 14 12 Italy and Greece have comparatively Higher corruption Lower WB Doing Business and Starting a Business Lower WEF GCI institutions, macroeconomy, labor and finance 8 6 4 2 Italy Greece Ireland Estonia % TEA -5 jobs in 5 years % TEA 6+ jobs in 5 years
Summary Comments Variations in growth ambitions can be seen across and within development levels Not necessarily the case that high TEA means low growth, and vice versa Necessity/opportunity motives provides the drive for entrepreneurship; environment influences whether and how it happens Corruption may constrain growth but not entry; linked to the environment Corruption facilitates firm entry when regulation and capital requirements are high (Dreher and Gassebner, 213) Corruption increases with inadequate legal and financial institutions, closed business networks when others engage in unethical behaviors (Tonoyan et al., 26) Conditions for starting and general business may facilitate entrepreneurship and growth, and established businesses Broad mix of conditions suggests a case by case analysis