Global entrepreneurship report - ResearchGate

Changes in Entrepreneurial
Activity Over Time
to the next. There was a statistically significant drop for only
three countries during this period (Brazil, Norway and the United
States). However, the situation changed dramatically between
2001 and 2002. Over this time period, there were statistically
significant drops for 17 of the GEM 2001 countries, no change for
nine, and significant increases for two — Argentina and India. 5
Importantly, this pattern of change in the TEA index appears
to mirror variations in the growth of GDP. 6 Among the 20 countries
in the GEM 2000, the average change in GDP growth from 1999
to 2000 was essentially zero (i.e., 0.82 percent). That is, just as
there was no statistically significant change in the TEA rate in
most countries (overall, -0.37 ), there was little change in the
annual growth rate for this period. Yet in the following period,
from 2000 to 2001, there was in fact a systematic decline in both
the TEA rate (-2.29) and the annual rate of growth among every
GEM 2001 country (-3.28). 7 This suggests that the worldwide
decline in entrepreneurial activity detected by GEM researchers is
associated with the recent drop in national economic growth.
Two phenomena illuminate how changes in national growth
rates might affect the level of entrepreneurial activity. First, about
two-thirds of entrepreneurial activity reflects a desire to take
advantage of a business opportunity. Second, three-fourths or
more of this opportunity-based entrepreneurship involves
replication of existing business activity, thus resulting in the
creation of few (if any) new markets. Since the primary
“opportunity” in most entrepreneurial efforts is an unmet
demand for goods and services, such unsatisfied demands are
likely to increase with general growth in a national economy.
If, on the other hand, the national growth rate declines, there
is likely to be a reduction in the demand for goods and services
and hence, less opportunity for market replication of new
businesses. Indeed, the connection between the slowing economy
and a reduction in entrepreneurial activity was most evident in
those countries — about half of the group — where a large
portion of the entrepreneurship centers around opportunitymotivated
entrepreneurship.
However, the relative year-to-year rank order of the
countries in GEM remains very stable. Country-by-country
comparisons of the 2000, 2001 and 2002 TEA rates yields
statistically significant correlations that range from 0.61 to 0.81. 8
Therefore, it is possible to conclude that this natural experiment
— a universal drop in national economic growth rates —
provides evidence that both macroeconomic conditions and
enduring national characteristics have an impact on the level of
entrepreneurial activity. A uniform drop in economic growth
followed immediately by an almost universal drop in
entrepreneurial activity suggests that macroeconomic conditions
have an effect. On the other hand, the relative stability in the rank
order of the countries suggests that stable national characteristics
also play a part. As the GEM research program continues it may
be possible to provide more precise evidence about the relative
impact of these disparate sources of influence.
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