The United States is the top entrepreneurial economy globally, says the 2014 Global Entrepreneurship and Development Index, better known by its acronym GEDI. Canada took the second spot, followed by Australia and then Sweden.
The GEDI index includes a rage of data on entrepreneurial activities and aspirations from each country, it describes how well 120 nations support entrepreneurial activity.
US best for venture capital
If you are looking to finance your business through venture capital the US is the place to be. Venture capital is provided to high-potential, early-stage, riskier start-up businesses. Many new businesses get off the ground with venture capital.
The study was carried out by a team of researchers from Imperial College Business School, London; the London School of Economics and Political Science; George Mason University, Fairfax, Virginia; and the University of Pécs, Hungary.
Co-author, Professor Erkko Autio, of Imperial College Business School, said:
“To understand the true impact of entrepreneurship in the economy, you have to go from bean counting to looking at the country’s entrepreneurship ecosystem as a whole. The US excels because it is strong in so many areas that matter.”
“Entrepreneurship plays a crucial role in the US economy and as a result policy initiatives are created to encourage entrepreneurial behavior. This, coupled with the culture of determination and motivation, makes the US a great place to be an entrepreneur.”
US poor on Economic freedom
Co-author, Professor Zoltan Acs, from George Mason University and the London School of Economics and Political Science, said:
“While the United States has faltered on the Index of Economic freedom and some other measures it has continued to outperform all other countries on entrepreneurship. And the gulf between the United States and other countries is large and appears to be widening and not narrowing. What explains this is an ecosystem that is both deep and wide at the same time.”
This year’s GEDI Index, for the first time, compared the experience of both male and female entrepreneurs, to reflect the growing importance and participation of women in entrepreneurship around the globe.
US also top entrepreneurial economy for women
Not only is the US the top entrepreneurial economy for men, but also for women, the study determined. The authors believe that targeted government policies are making it much easier for females to set up their own businesses.
In 2012, the US government launched the Women’s Entrepreneurship in the Americas policy to encourage more women to start up their own companies. This leverages public-private partnership to help women overcome some of the barriers to setting up their own enterprises, such as finance, networks and training.
The US came top in producing innovative products and services that are not yet offered by other businesses. “This testifies of the potential of entrepreneurship to discover new sources of growth in the US economy,” the authors wrote.
More top students become entrepreneurs in US
The US also leads in the quality of human resources flowing into entrepreneurship. While in other countries top students tend to opt for secure jobs, in the United States they are more likely to pursue a career as entrepreneurs.
However, the US was relatively weak regarding networking, coming in at 14th place. According to the International Telecommunication Union, France and the UK have higher rates of internet users than the US.
Broadband costs in the United States are relatively higher, a factor that goes against some aspiring entrepreneurs wanting to take advantage of online opportunities and resources.
The authors believe that GEDI could be utilized by US Government policymakers to address some of the bottlenecks that undermine US entrepreneurial performance.
UK slipped down the ladder
The United Kingdom slipped from sixth place in 2013 to ninth in 2014. Researchers suggest that UK entrepreneurial performance is being held back by negative attitudes and lack of ambition, compared to the leading entrepreneurial economies.
While entrepreneurial activity is innovative in the UK and enjoys strong cultural support, people’s attitudes overall need to become more positive, the authors added.