Startup rate over the world

January 23rd, 2007

The Global Enterpreneurship Monitor published a study (summary pdf) about the rate of the population starting or running new businesses throughout 74 countries in the world. A couple of highlights, in the USA every tenth person is trying to make a living on its own, while in Germany, 24 of 25 people are wage-slaves, so many, that Deutsche Bank is touting the need for more European venture funds (pdf). China and India, the two large emerging markets have similar numbers to the US with 16 and 10%, respectively.

What do these numbers mean?

If you look at the report, the highest quota of adults engaged in enterpreneurial activity is in Peru, with 40% and the lowest is in Belgium, with 2.7%. Yet, Belgium has a GDP per capita of $31,800, a literacy rate of 99% and a life expectancy of 79 years. Peru, on the other hand, has the Machu Picchu, a seemingly amazing climate and much lower levels of GDP. This article says “Peruvians [...] when facing adverse conditions, will rapidly engage in almost any (usually small) entrepreneurial activity to survive; they cannot expect governmental support to help them find jobs or get any sort of allowance” - according to that logic, a higher number of persons running their own businesses would hint on the economy being in bad shape. If you think about what it means to have a job as opposed to being self-employed is, from a point of view that you team up with someone in order to be able to specialize more in an area and hopefully create better products / give higher quality service because you can focus yourself more on what you are doing. Of course, most jobs also include giving up on the part of taking risk (and partially, responsibility) for your actions which has the side effect of getting a salary every month regardless of whether the company makes a loss or millions of profit.

That is, if enterpreneurship is not coupled with prospects of big wins, it really isn’t getting you much further than a job.

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