GEDI analyses three measures, using a range of data to explore the entrepreneurial activities, aspirations, and attitudes of each country. The 2012 edition uses mid-2010 data and the Index itself is expected to have a direct impact on the design and implementation of entrepreneurship and job-creation policy in both established and emerging economies.
The UK analysis will be launched today, Tuesday 24 April 2012 at an event hosted by Imperial College Business School, featuring speakers including the Minister for Universities and Science, David Willetts.
The GEDI is the only index to fulfil the three major requirements of entrepreneurship index-building, namely:
1. Sufficient complexity to capture the multidimensional nature of entrepreneurship;
2. Inclusion of indicators encompassing quality-related differences, in addition to quantitative or level-related measures; and
3. Inclusion of individual-level as well as institutional variables.
Previous indicators of the level of entrepreneurship had shortcomings such as failing to incorporate the businesses’ differing impacts. For instance, a traditional agricultural business established in Uganda or Peru was given equal importance as an Internet-related venture in Silicon Valley.
Previous measures also failed to take into account differences in environmental factors when in fact, the efficiency and sophistication of the institutional setting could have a major influence on the quality of entrepreneurship.
The UK comes in joint 14th place, behind the USA (1st) and Australia (2nd), and European countries including Sweden, Switzerland, Iceland, Denmark and Belgium.
The UK scores its strongest ranking, 5th, for its level of start-up activity - the share of technology sector start-ups, the quality of the human resources in start-up firms and the share of start-ups in areas where not many other businesses are offering similar products.
It is weak in its entrepreneurial aspirations, coming 12th in Europe and 30th overall, for the efforts of its early-stage entrepreneurs to introduce new products and services, develop new production processes, penetrate foreign markets, substantially increase the number of firm employees, and finance their business using venture capital.
It also ranks in the bottom quarter for the percentages of the population who personally know someone who has started a new firm; who perceive good opportunities to start a new firm in the area where they live; and who perceive entrepreneurship to be a good career choice.
The researchers behind the Index, from George Mason University, the University of Pécs and Imperial College Business School, suggest that the main issues that need to be addressed in the UK are encouraging individuals to invest in start-ups and giving entrepreneurs easy access to finance. They advise policymakers to look at how their initiatives can address these bottlenecks.
The report’s authors believe that in the UK, access to capital for start-ups and small and medium-sized enterprises continues to be a constraint. They say that even with recent policy initiatives designed to address these weaknesses, it will be crucial to examine access to finance in particular, and look at how policies might be improved or adapted in light of the bottlenecks the Index has identified.
Professor Erkko Autio of Imperial College Business School said: "The good news is that there does not seem to be anything fundamentally wrong in the formal support system. The UK could significantly improve its performance through well-targeted policy measures, especially those encouraging individuals to invest in start-ups.
"It is timely and important to review the entrepreneurial health of the UK. Although weak signs of economic recovery are starting to appear in North America, the EU continues to feel the effects of the financial crisis. In the UK, the government faces the complex challenge of reducing debt while simultaneously promoting growth in the private sector. This set of conditions emphasises the potential of entrepreneurship as a mechanism to both restore the balance between public and private sectors as well as kick-start economic growth."
The GEDI Index will be launched on Tuesday, 24 April, at 14.00 at the Victoria & Albert Museum, Exhibition Road, South Kensington. Visit here for more information about the event.
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