This 2019 GEM research reveals “hives” of entrepreneurial activity by identifying the levels of Total early-stage Entrepreneurial Activity (TEA) and where it is most prevalent. It is a highly variable picture. TEA varies from 5% of adults or less in Italy, Pakistan, Poland and Japan to well over 35% in Chile and Ecuador. Within the 50 economies participating in the 2019 GEM research, the six highest levels of TEA are all in the Latin America & Caribbean region. Based on GEM research on entrepreneurial framework conditions, business conditions can be di cult in many Latin America & Caribbean economies, yet there is clear evidence that entrepreneurial activity is high. This may seem paradoxical but could be due to factors such as social and cultural norms, the lack of alternative income opportunities and the extent of competition, as well as rapid growth in economies.
A good indicator of the health of entrepreneurship in an economy is the level of Established Business Ownership (EBO). Two per cent or less of adults are Established Business Owners in Puerto Rico, Egypt, Mexico and Oman, compared to 20% in Madagascar, 16% in Brazil, 15% in Guatemala and Ecuador and 14% in Greece.
In many economies, the proportion of adults starting and running a business exceeds that of those owning established businesses. This could simply be a time lag issue for those economies experiencing a recent increase in entrepreneurship that is not yet reflected in mature activity. However, there can be little doubt that this points to difficulties in some economies in transitioning new starts into established businesses.
More than seven out of 10 new entrepreneurs in India, Mexico, Puerto Rico, China and Saudi Arabia are in the consumer services sector, which provides less than four in 10 new entrepreneurs in Croatia, Latvia, North Macedonia and Norway. Consumer services may be relatively low-cost and with low barriers to entry— an “easy win” for new entrepreneurs — but competition is fierce and margins low. Entrepreneurship in sectors with highly differentiated, difficult-to-replicate products and services are desirable since they are highly value-adding to individuals and economies.
For more information, access the Global Report (Chapter 3 – Entrepreneurial Activity Across the Globe in 2019, page 36).