Entrepreneurship is becoming increasingly common globally, with more people than ever willing to go all in on a gap in a market. Also trending currently is a rise in freelancers and entrepreneurs willing to head abroad to deliver their products and services. It’s predicted that over 70 per cent of companies on the S&P 500 bring in some amount of international revenue, demonstrating the need for international connections wherever you are on your business journey. Travelling while doing business also holds the high potential of expanding creativity and development of soft skills, which now prove as vital to success as any technical and sector-specific capabilities. With the right facilities in place, the birthing of new businesses can also help towards developing economies and markets.
The data from this year’s Global Entrepreneurship Monitor (GEM) study, led by Aston Business School, was recently released, showing which nations host the most fertile ground for budding business owners around the world. The study, which collated and analysed hundreds of thousands of face-to-face, phone and online interviews across 120 economies, took into account metrics including access to finance, education and infrastructure.
The global landscape
While business and job creation expectations generally saw a downturn due to the pandemic, with a fear of business failure proving to be a key barrier globally towards starting a company for many, business owners are continuing to work towards a more prosperous, inclusive, and socially and environmentally conscious future. This is being made evident by a current increase in social and environmental implications being taken into account by new entrepreneurs when making strategic decisions about the future of their business.
According to this year’s GEM report, people aged 18-34 remain more likely to start their own company than older citizens, with entrepreneurial activity among this age group exceeding that of people aged 35-64 in most economies. Latin American & Caribbean region was found to host the highest levels of early-stage entrepreneurial activity globally. However, levels of entrepreneurial activity were also highly variable from country to country within regions, with the study citing social and cultural norms along with economic variables as a possible factor. In addition, only six economies had more than one in four adults starting or running a new business: Guatemala, Colombia, Panama, Chile, Uruguay and the United Arab Emirates.
The ongoing impact of the Covid-19 pandemic on entrepreneurial activity has led to varying perspectives globally, with a possible factor being dependence on government support. While 12 countries saw decreases in adult residents finding good local business opportunities – including developed economies such as the US, Poland and Greece – nine participating nation saw an uptick in discovered outlets for entrepreneurship, such as Brazil, Puerto Rico and Saudi Arabia.
In terms of business exit rates, this was lowest across Europe with all countries at less than six per cent, while every economy outside Europe had a rate of over this figure, and the highest business exit rates were found in North America, Latin America, and the Gulf region. This may be due to differences in business culture between Europe and the rest of the world, says the study.
There was also found to be a negative association between the level of early-stage entrepreneurial activity and human capital development, as measured by the United Nations Human Development Index (HDI). The use of the HDI metric this year replaced levels of GDP per capita, which was used in previous annual studies.
The GEM research consisted of two main studies, the findings of which were brought together to develop a full picture of the worldwide entrepreneurship landscape. These are the Adult Population Survey (APS) and the National Expert Survey (NES).
The APS invited a random participant sample of at least 2,000 adults aged 18-64 from each from 49 featured countries — structured to reflect the overall population in terms of age, gender and location — to discuss their activities, attitudes, motivations and ambitions. From here, participants shared their current active involvement in starting or running a new business at different stages of development, whether nascent, established or high-growth. This stage of the whole research is designed to determine why people look to start their own business, as well as how businesses can be developed, and the state of play of informal or unregistered economy – which isn’t usually taken into account by other research, yet may represent a significant proportion of the total stock.
The NES, meanwhile, gauges the views of at least 36 identified national experts from across the world on their respective economies’ entrepreneurial framework conditions. These were:
- A1 – Entrepreneurial Finance
- A2 – Ease of Access to Entrepreneurial Finance
- B1 – Government Policy: Support and Relevance
- B2 – Government Policy: Taxes and Bureaucracy
- C – Government Entrepreneurial Programs
- D1 – Entrepreneurial Education at School
- D2 – Entrepreneurial Education Post-School
- E – Research and Development Transfers
- F – Commercial and Professional Infrastructure
- G1 – Ease of Entry: Market Dynamics
- G2 – Ease of Entry: Burdens and Regulations
- H – Physical Infrastructure
- I – Social and Cultural Norms
This study aims to determine the overall quality of the entrepreneurship landscape in each participating country, with a National Entrepreneurship Context Index (NECI) being calculated, which allows for the ranking of economies in terms of support and encouragement. This helps budding entrepreneurs looking to work abroad figure out where would be best for them to relocate, as well as aiding policymakers in their benchmarking duties.
The most vital GEM variable for the researchers involved is the level of Total early-stage Entrepreneurial Activity (TEA), which calculates the proportion of the adult population that is starting or running a new business. The research recognises three main stages of businesses founded by entrepreneurs:
- Nascent (referring to those that have not yet paid wages or salaries for three months);
- New Business Owners (for businesses that have paid wages or salaries for three months or more, but for less than 42 months);
- Established Business Owners (for those that are running and have been paying wages or salaries for 42 months or more).
In addition, economies were categorised into three income groups, sourcing data from The World Bank: Group A (greater than $40,000); Group B (between $20,000-40,000); and Group C (less than $20,000). Seven of the top 10 best countries for entrepreneurs fell into Group A, with one categorised as a Group B economy, and two as Group C.
This gallery takes a deeper dive into the top 10 best countries for entrepreneurs to do business, as revealed by the Global Entrepreneurship Monitor.