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Green shoots of recovery in entrepreneurship beginning to appear

 

28/09/2016 - The post-crisis recovery in entrepreneurial activity remains mixed across countries, but new data released today by the OECD provides tentative signs of a turning point, with trends in enterprise creation rates pointing upwards in most economies.

Entrepreneurship at a Glance 2016 suggests that a revival in entrepreneurial activity could help improve economic growth and provide an important longer-term boost to productivity, given the positive link between start-up rates and productivity growth. 

 

The report shows that post-crisis growth in Europe has been more dependent on small and medium-sized enterprises (SMEs) as drivers of economic growth than in the United States. It also offers new evidence that small firms face greater challenges than large firms in breaking into emerging markets. 

 

Data in this year’s report from a new, innovative online monthly survey prepared by Facebook, the OECD and the World Bank also points to a more positive outlook among new entrepreneurs present on Facebook.   

 

LIVE WEBCAST: Launch of Entrepreneurship at a Glance 2016 

The Future of Business Survey, which covers small businesses with active Facebook sites in 22 countries worldwide, provides new insights on the importance of creative destruction and innovation. It shows that the proportion of young firms - those that are less than three years old - that have a more positive outlook and expect to increase employment in the short term is higher than the corresponding proportion of established firms - those that are more than 10 years old -  in nearly all countries. 

 

The OECD confirms that most countries continue to show gender gaps in factors that are key to entrepreneurship, but  new evidence from the Future of Business Survey  reveals that, once up and running, women are as confident as men about their business. Men are on average more likely to declare that they could access funding to set up a business and that they have the training to do so. These gender gaps likely explain differences in outcomes: 5.1% of men aged 15-24 are self-employed, versus 3.6 percent of women in this age group, while 29.2% of employed men aged 55+ are self-employed, compared with 15.9% for women.

 

“No single indicator can adequately cover a topic as complex as entrepreneurship,” said OECD Chief Statistician Martine Durand. “It is by looking at a series of factors – from market conditions to the regulatory framework, enterprise culture and access to finance – that we are able to fully take the pulse on the state of entrepreneurial activity and make policy recommendations that will contribute to enhancing it.”


Key findings: 

  • Trend start-ups remain below pre-crisis rates in most OECD economies, although in Canada, France, the Netherlands, Norway, Sweden and the United Kingdom rates were higher at the end of 2015 and beginning of 2016 than before the crisis. Trends in the most recent periods are pointing upwards in most OECD countries,

 

  • Bankruptcy rates in 2015 were  below pre- crisis levels in the United States, Japan, Canada, Germany, Brazil and South Africa. By contrast, they were significantly higher in Austria, France, the Netherlands and Norway, and were over double their pre-crisis rates in Italy and nearly four times as high in Spain, although recent quarter on quarter trends point strongly downwards in both countries.

 

 

 

  • Growth in the number of SMEs in the euro area has outpaced that in the US but the reverse is true for large enterprises.  Because SMEs typically have lower labour productivity, this may point to structural factors underpinning the productivity gap between the euro area and the United States.

 

  • Small firms typically only export to neighbouring markets.  European small/micro-enterprises, for example, account for nearly 20% of trade with nearby destinations, but only for slightly more than 5% of exports to China or the United States. Fostering export opportunities to more   distant, and particularly new emerging markets, and helping address barriers to SME trade can stimulate growth and entrepreneurialism.

 

  • Very few SMEs export in tangible capital-intensive industries. But, disproportionately more do so in activities that are built on knowledge capital, such as marketing or design, or other niches, where intangible capital plays a greater role. Policies that nurture SMEs in knowledge-based sectors and niche activities can be a route to export success.

 

Entrepreneurship at a Glance presents indicators of entrepreneurship collected by the OECD-Eurostat Entrepreneurship Indicators Programme (EIP). Started in 2006, the programme develops multiple measures of entrepreneurship and its determinants according to a conceptual framework that distinguishes between the manifestation of entrepreneurship, the factors that influence it, and the impacts of entrepreneurship on the economy. 

 

Note: Live interview at 15h15 about the future of business on Facebook Live, with OECD Chief Statistician Martine Durand, World Bank Lead Economist Gero Carletto, and Facebook Vice President for Europe, Middle East & Africa Nicola Mendelsohn.

 

For further information on Entrepreneurship at a Glance 2016, contact the OECD Media Office (+33 1 4524 9700).

 

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