Why measure entrepreneurship?

Entrepreneurship is worth caring about because it produces innovations that can make goods and services cheaper and less resource-intensive for everyone. Entrepreneurs also provide employment for others in the process.

According to the World Bank:
“Entrepreneurial activity is a pillar of economic growth. For evidence of the economic power of entrepreneurship, we need look no further than the United States, where young firms have been shown to be a more important source of net job creation than incumbent firms.”

According to the OECD:
Entrepreneurship and entrepreneurs have long been recognised as important sources of innovation, and thereby also of growth and employment.”

By measuring entrepreneurship activity, we can understand where entrepreneurs are operating, where they are not operating, and why. We can then use this information to reduce the cultural, economic, and institutional barriers that stand in their way.

In the 2014 Global Entrepreneurship and Development Index (GEDI), we measure entrepreneurship by evaluating 15 different variables from the entrepreneurship ecosystem. We look at things like how much money is available to finance new businesses, to how risk-averse individuals are in that country, and what percentage of new businesses are started by women. By comparing countries using this entrepreneurship-related data, we paint a global picture of the state of the entrepreneurship ecosystem. From this picture we can learn which countries are providing better conditions for entrepreneurs and which countries could be doing more.

After identifying the countries that are leading and lagging, we can use the individual indicators or pillars in the GEDI Index to delve deeper into the data. This deeper dive can reveal what particular conditions are driving high or low scores for a given country, and expose areas where policy improvements would improve the entrepreneurship ecosystem the most.

What good does all this attention do?

Our Institute has held several workshops with country governments to bring entrepreneurs and policy makers together to examine our entrepreneurship data, and to discuss the context for that data. Working with individuals on the ground is critical for understanding local patterns and trends. After a thorough, collaborative phase where we diagnose the problems, we work with theses two groups to develop solutions that will address their country’s most difficult entrepreneurship challenges.