18/11/2008 - Strong growth and economic restructuring has provided fertile ground for dynamic entrepreneurial activity in countries such as Romania, Hungary and the Slovak Republic over recent years. But amid the current global downturn governments in Eastern Europe, as elsewhere, face stiffer challenges in supporting and nurturing new businesses.
The OECD-Eurostat Entrepreneurship Indicators Programme is the first attempt to collect, compare and analyse international data on new companies that are creating jobs. By measuring the rates at which new firms are created or close down, studying factors which allow enterprises to grow and assessing the impact of small businesses on jobs, turnover and trade, the programme aims to build a knowledge base to help policy-makers create the right environment for entrepreneurship to flourish.
Initial findings now published cover 15 European countries, the US, Canada and New Zealand. Other countries are expected join the programme over the coming months. The results show that in 2005 the number of new businesses as a proportion of all companies – the “birth rate” - was highest in Romania, Estonia, Lithuania and the Slovak Republic. Strong growth and economic restructuring related to European Union adhesion is likely to have been the key factor, according to the Programme’s report, Measuring Entrepreneurship: A Digest of Indicators.
The report also shows the business birth rate in the countries surveyed was on average 4 to 5 percent higher in the services sector than in manufacturing. Closure rates are also higher in services, reflecting the higher entry and exit costs for manufacturing companies.
Even in 2005, a year of relatively robust economic growth, a large number of new firms failed to survive their first year. In the Netherlands, for example, 40 percent of new enterprises closed down within the first 12 months.
The report also analyses high growth firms. It finds a large share of new businesses have difficulties achieving higher growth after their first year. Where it is achieved, faster growth more frequently takes the form of higher turnover rather than more jobs. At less than 2 percent of all companies, the number of young firms with fast-growing turnover (known as “gazelle” firms), nevertheless remains small in the countries surveyed. Lithuania, Latvia and Bulgaria are exceptions, however. The report shows young fast-growing manufacturing firms represented more than 3 percent of all companies in these countries in 2005.
Measuring Entrepreneurship: A Digest of Indicators can be downloaded from OECD’s website: www.oecd.org/statistics/entrepreneurshipindicators. For more information about the OECD-Eurostat Entrepreneurship Indicators Programme, journalists should contact Koen De Backer in OECD’s Statistics Directorate (tel: +33 1 4524 7661).