World Economic Forum: Chile and Colombia Best in Entrepreneurial Vitality

Davos

Most advanced economies are lagging in entrepreneurial vitality. According to a report published last week by the World Economic Forum, the most ambitious and innovative businesspeople are to be found in emerging countries.

The Leveraging Entrepreneurial Ambition and Innovation Report found that Chile and Colombia score best for entrepreneurial spirit and drive. In both countries, start-up businesses are significantly contributing towards economic growth, job creation, and innovation. “It is not just about the number of entrepreneurs. The amount of innovation and ambition matter as much,” says Head of Investors Industries at the WEF Michael Drexler.

“We found that most advanced economies typically have less early-stage entrepreneurial activity, and many of them lack in either ambitious or innovative entrepreneurship, too. That means they miss out on much of the positive impact entrepreneurs can have on their economy.”

Mr Drexel explained that in dynamic economies such as those of the United States, Israel, and Ireland businesspeople may indeed be ambitious and optimistic, but often score only average or lower on early-stage entrepreneurial activity – meaning that new initiatives often fail to take off, let alone bear fruit. Mr Drexel hopes that the report may provide policymakers with valuable insights and a better understanding of the specific conditions needed to nurture entrepreneurship.

“We found that most advanced economies typically have less early-stage entrepreneurial activity, and many of them lack in either ambitious or innovative entrepreneurship, too. That means they miss out on much of the positive impact entrepreneurs can have on their economy.”

– Michael Drexler, Head of Investors Industries at the WEF

The study combines two data streams to examine the relationship between levels of entrepreneurship and competitiveness. Using crossed-referenced data going back five years, the report surveys 44 economies for entrepreneurial preconditions such as awareness of opportunity, inherent business skills, cultural tolerance of risk-taking, and entrepreneurial connections.

Scoring low on the Global Competitiveness Index (GCI), does not mean that a given country lacks in entrepreneurial spirit. Uganda is a case in point: of the 44 countries examined, it ranks last on the GCI scale but claims the top position when early-stage entrepreneurial activity is considered with close to 35% of population engaging in some form of business. However, very few of Uganda’s start-ups are confident in the future. Their level of ambition is minimal as is innovation. Clearly conditions are far from optimal in Uganda. That said, a change in policy could possibly unlock vast economic rewards for the country.

Contrast this to both Chile and Colombia: here, most start-ups tend to be highly innovative and very ambitious. Moreover, there are plenty of them: more than a quarter of the population is engaged in running a business.

The report splits the examined countries into two groups: those with high levels of activity – such as Uganda, Brazil, and Mexico – and those with high levels of innovation – such as France and Denmark. Other countries may have high levels of ambition (US and China). However, only Chile and Colombia score well across the board and as such have become places of entrepreneurial excellence.