Trends in entrepreneurship in different countries since 1999: an analysis of GEM

Research on conditions for entrepreneurship

The Global Entrepreneurship Monitor (GEM) has been studying the factors influencing business development in different countries of the world since 1999. GEM identifies key aspects such as the availability of capital for startups, the role of government support, tax policy, level of bureaucracy, access to business education, ease of market entry and infrastructure. Based on these factors, a composite National Entrepreneurial Context Index (NECI) is determined for each country.

Categories of countries by GDP per capita

Countries are classified into three categories based on GDP per capita: category A (over $40,000), category B ($20,000–$40,000), and category C (under $20,000). According to the latest GEM study, over 2,000 experts from 50 countries participated in the survey. The impact of the pandemic has significantly affected startups both in the past and in 2020. Nevertheless, interest in entrepreneurship remains, although more than half of potential entrepreneurs believe that starting a business is more difficult now.

Trends and results

Entrepreneurs are most often young people with an education. High-income countries show better results: the UAE took first place, improving in 11 out of 13 aspects with a NECI index of 6.8. The Netherlands and Finland came in second and third. Meanwhile, Russia ranks 39th, Belarus 48th, and Ukraine did not make the ranking.

Development of entrepreneurship in the UAE

The UAE is actively developing entrepreneurship as a strategic means to diversify its economy away from total dependence on oil revenues. This strategic decision has led to a steady increase in business activity in the country. A landmark symbol of the UAE's new economic strategy was the creation of the Burj Khalifa in Dubai.

In 2021, the United Arab Emirates saw a significant decrease in income for 62.3% of households due to the pandemic, which is one of the highest rates among A-level countries. Despite this, many entrepreneurs remain optimistic and see new opportunities. The research showed that 59.9% of aspiring entrepreneurs noticed new prospects that emerged as a result of the pandemic, and 75.9% plan to intensify their use of digital technologies to develop their business in the next six months.

This approach has led to the highest percentage of entrepreneurs in the UAE planning to hire six or more employees in the next five years among A-level countries. It requires confidence and significant investments to achieve the ambitious goals set for the state. At the end of 2021, the Minister of Entrepreneurship and Small Business announced a new strategy aimed at launching 20 startups, each of which is expected to generate over $1 billion in revenue by 2031.

Amsterdam, the capital of the Netherlands, also experienced significant growth in the launch of new companies in 2021, partly due to the high assessment of the country's opportunities and the rapid recovery of the economy after the lockdown period. Among the residents of the Netherlands, the number of those who see favorable conditions for starting a business in their area has increased to 69.9%, which is significantly higher than in 2020.

In addition, 17.6% of Dutch residents intend to start a business in the next three years, a significant increase from 13% in 2020. The country's entrepreneurial sentiment index has risen to 14.2% in 2021, the highest in the history of the Netherlands' participation in the survey.

These data indicate that a significant portion of new entrepreneurs in the Netherlands assessed and took advantage of new opportunities despite the challenges brought by COVID-19. Government support programs for the self-employed and businesses from 2020 to 2021 played a key role in preserving many businesses and contributed to the rapid recovery of economic growth in the country.

Finland: high activity, low interest

Finland is a unique country where a high level of entrepreneurial activity is combined with a low desire to become an entrepreneur. This may be due to a fear of the risks that business processes entail. Because of this, women are also less likely to be involved in entrepreneurial activities.

Entrepreneurial education is a priority.

It should be noted that Finland has achieved high results in the field of entrepreneurial education, which remains a priority for the government. However, not all citizens are eager to apply their knowledge in practice due to potential difficulties.

Favorable economic environment

On the other hand, a favorable economic environment and high business activity indicators create good opportunities for the establishment of new enterprises in Finland. Even with a low number of people wanting to start their own business, the country offers conditions for successful development and growth for all those who are ready to take on this challenge.

Stable business growth in Saudi Arabia

In turn, Saudi Arabia demonstrated stable growth in entrepreneurial activity in 2020 and 2021, despite the pandemic. This was made possible by the increase in taxes, oil prices, and other factors that stimulated domestic investments.

Favorable economic climate

This economic growth opens up new opportunities, especially for businesses focused on the domestic market. The level of entrepreneurial sentiment in the country was high in 2021, which could lead to accelerated development in the future. More than 90% of the population sees opportunities for entrepreneurship and is ready to pursue their plans with confidence in their abilities.

Improving conditions for business

However, Saudi Arabia must continue to improve its business environment to achieve its 2030 entrepreneurship goals. With a supportive economic climate and high entrepreneurial activity, the country is well positioned for success.

Increase in consumer spending and the domestic market

In the last two years, there has been a trend of increasing consumer spending in Saudi Arabia, prompting many entrepreneurs to focus on the domestic market. This has led to a rapid development of new businesses that are counting on significant income inflows from abroad. Among the countries offering favorable conditions for business, Lithuania stands out, particularly its capital Vilnius, which ranks highly among B-category economies.

Investment climate and support for entrepreneurship

Lithuania has created a favorable investment climate, as evidenced by the growth in the number of new technology companies, particularly in the fintech and blockchain sectors. This reflects the government's commitment to fostering entrepreneurship. An important step in supporting businesses was the establishment of the Entrepreneurship Support Fund in 2009. Despite its small size, it has had a significant impact on the business environment in the country.

Support for education and infrastructure

The Lithuanian government also pays attention to education and infrastructure development, which is highly appreciated by experts. For example, high ratings in the field of school business education and physical infrastructure indicate their importance for business development in the country.

Challenges and potential for innovation

However, Lithuania faces certain challenges, such as difficulties in market penetration due to its small size. Nevertheless, high scores for conducting research indicate favorable conditions for innovation and development in this area. Overall, Lithuania continues to strengthen its status as an attractive country for entrepreneurship and innovation.

By the end of 2021, South Korea had recorded fewer than 5,000 deaths from COVID-19, which contributed to a successful economic recovery and GDP growth. Less than 1.5% of households reported a significant decrease in income due to the pandemic, which is the lowest level among high-development countries that participated in the study. This allowed Korean entrepreneurs to maintain stable business activity and also led to a significant increase in the number of startups and ongoing business operations.

New opportunitiesHowever, only a small number of entrepreneurs have discovered new opportunities due to the pandemic, as the crisis had a minimal impact on the country's economy. One of the weaknesses is the commercial and professional infrastructure, rated as 5.0 out of 10. This factor indicates limited access to essential legal and financial services for new businesses.

The situation in NorwayIn Norway, a high-income country, there has also been a recovery from the effects of COVID-19. One of the main issues has been the rapid development of the economy, which led to an increase in GDP and a demand for hired workers.

Qatar needs to actively develop its exports and strengthen its foreign economic ties. Statistics show that the level of entrepreneurship in Qatar today is one of the lowest among A-level countries. More than 25% of local entrepreneurs earn their income outside the country. To support these entrepreneurs, it is important to find new markets where they are willing to pay fair prices, similar to those accepted in other developed economies, such as Norway.

Entrepreneurial activity in the capital of Qatar

In the capital of Qatar, Doha, there is a high level of entrepreneurial activity among the population and the business community. For example, in 2021, 73.8% of Qataris saw opportunities for starting a new business, and 70.9% had the necessary knowledge and experience. Qatar ranks among the leading countries at the A level in terms of the number of new enterprises planned to be launched in the next three years (50.4%).

The economic situation and issues in Qatar

Despite this, the business launch index in Qatar has slightly decreased, which can be attributed to the economic difficulties caused by the COVID-19 pandemic. In 2021, 53.5% of Qataris reported a decrease in their income due to the pandemic, which also affected entrepreneurs, leading to the highest level of business closures among A-level countries. The overall percentage of closed businesses nearly matched the percentage of new openings, indicating a significant decline in this sector.

Stimulating startups and addressing access to finance issues

One way to address this problem is to incentivize start-ups offering business services, often operating remotely and promising significant revenues. Qatar has seen a rise in new consumer service-oriented companies, which often fall victim to economic fluctuations. However, the main constraint to entrepreneurship in the country remains access to financial resources. To address this problem, the government can provide tax breaks and other financial incentives to new businesses, especially in innovative sectors. In response, financial institutions may receive tax breaks or subsidies

Stimulating economic growth in Switzerland

The large development program "Qatar National Vision 2030" could become a key factor in stimulating economic growth in Switzerland. In the country's financial and business hub, Zurich, the entrepreneurial confidence index significantly increased in 2021. According to statistics, more than half of the adult population sees favorable opportunities for starting a business, which is a historically high figure.

However, in addition to positive changes, Switzerland is facing long-term challenges. The high level of business resilience was undermined by the pandemic in 2020, and the recovery process is continuing slowly.

Acceleration of entrepreneurship recovery

More new businesses are needed to accelerate the recovery of entrepreneurship levels. Women also need to learn entrepreneurial skills to reduce gender disparities in this area. Training and mentoring play a key role in the successful development of business projects by young entrepreneurs.

National business strategy in Spain

In Madrid, the Spanish president presented a national strategy aimed at transforming the country into a leading technology startup hub by 2030. One of the main goals is to ensure diversity among business owners based on gender, regional, socio-economic, and age criteria in the startup sector. In 2021, the level of new businesses in Spain saw a slight increase.

The main component of the strategy is to reduce the investment gap between Spain and its neighbors, as well as to attract additional capital to support entrepreneurs.

Revival of entrepreneurship in the USA after the COVID-19 pandemic

The United States has seen a remarkable recovery in business activity after the difficult times of the COVID-19 pandemic. This indicates significant potential for new business development in the country. While some regions have shown improvement in the underlying indicators, the area of government still needs improvement. It is therefore important that the federal government continues to develop targeted programs to support entrepreneurship.

Comparison with previous economic crises

Compared to the recession of 2008-2009, the United States managed the negative effects of COVID-19 more successfully. In 2021, the number of new businesses nearly reached pre-pandemic levels. The Census Bureau noted a significant increase in company registrations after the decline during the pandemic.

Increase in the number of entrepreneurs during the pandemic

In 2020, only a few entrepreneurs saw the crisis as an opportunity for new business, but in 2021, their numbers increased by one and a half times. More than 60% of respondents plan to actively use digital technologies to adapt to the changing market needs brought about by the pandemic.

Growth of individual entrepreneurs (IE)

A noticeable trend during the COVID-19 period has been the increase in the number of companies where only one person works. In 2021, the share of the adult population wanting to remain the sole worker in their business grew by 20% compared to the previous year. This opens up new opportunities for flexible forms of labor and business development.

When developing support measures for this sector, it is essential to consider access to health insurance and social security in order to ensure stable conditions for entrepreneurship development in the country.

Global Entrepreneurship Monitor survey

Since 1999, the Global Entrepreneurship Monitor (GEM) has been studying the conditions for doing business in various countries, highlighting several important factors for entrepreneurs, such as:

• Availability of sufficient funds to start up businesses
• State support for business
• Tax sizes
• Scale of bureaucracy
• Business education
• Ease of market entry
• Availability of infrastructure, etc.

Based on these factors, GEM calculates the composite index of the national entrepreneurial context for each country (NECI).

The current ranking, which was based on a survey of more than 2,000 experts from 50 states, highlights the following general findings:

The impact of the pandemic on entrepreneurship

The pandemic significantly impacted startups last year and in 2020. Household incomes decreased, which often hindered entrepreneurs from starting new businesses; however, people's interest in launching their own companies increased. Nevertheless, in 18 out of 47 countries studied, more than 50% of potential startup owners stated that starting a business has become more difficult.

Countries with favorable conditions for entrepreneurship

According to the GEM study, the most favorable conditions for entrepreneurship are found in wealthy countries. The United Arab Emirates topped the ranking, followed by the Netherlands in second place and Finland in third.

In most countries, men are more likely to start a new business than women. Entrepreneurs tend to be relatively young people who have higher education.

United Arab Emirates

The most favorable conditions for entrepreneurship have emerged in the United Arab Emirates. In 2016, the country began implementing a new strategy, focusing on entrepreneurship as a means of diversifying the economy, which previously relied heavily on oil extraction for the majority of its income.

In 2021, 62.3% of residents in the Emirates reported a decrease in household income due to the pandemic, but entrepreneurs remain confident in the face of these challenges. Among aspiring entrepreneurs, 59.9% say they see new opportunities that have arisen as a result of the pandemic, and 75.9% plan to increasingly utilize digital technologies to grow their businesses in the next six months.

Netherlands

In 2021, the Netherlands saw a significant increase in new company launches. Among the Dutch population, 69.9% saw good opportunities for starting a business where they lived. Additionally, 17.6% of respondents from the Netherlands intend to start a business within the next three years. This shows that many entrepreneurs have recognized and embraced new measures, as well as the positive opportunities that have emerged in the country, despite some obvious challenges posed by COVID-19.