GEM examine proves significance of entrepreneurship when there’s a decline within the financial system – Dylan Jones-Evans

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As an entrepreneurship academic for more than 30 years, the annual publication of the Global Entrepreneurship Monitor (GEM) is one of the highlights in my program each year.

Based on nearly 140,000 interviews with adults from 46 economies worldwide, this is a study of entrepreneurial activities, attitudes and ambitions that has been collecting data since 1999.

However, the 2021 report is particularly relevant as the data was collected during a Covid-19 pandemic that has decimated economies. Therefore, this is one of the first international measurements of corporate blockades at the entrepreneurship level. It is also important to assess whether entrepreneurial activity, as in previous recessions, will reinvigorate global economic recovery

What are the main results of the GEM report 2021? With only six GEM countries reporting that less than one in three adults experienced a decline in household income due to the pandemic, the study again shows the importance of entrepreneurship as an income-generating alternative when the economy is declining, especially in poorer countries.

In fact, entrepreneurship is highest in Latin America, Africa and the Middle East and lowest in Europe and North America. Despite the potential of entrepreneurs in productive jobs and employment for many, the majority of entrepreneurs who start their business report that it has been more difficult than it was a year ago.

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As with other manufacturing activity in many economies, four out of ten countries in the GEM study have seen a significant decrease in the proportion of adults starting or running a new business, although it is also worth noting that activity increased in almost a quarter of the economies has between 2019 and 2020.

With that in mind, it’s no surprise that respondents from 43 economies in the GEM adult population survey were more likely to know an entrepreneur who stopped their business due to the pandemic than an entrepreneur who started their business due to the pandemic.

This was to be expected, but it is good news that many people are actively looking for opportunities associated with the massive changes in business and consumer behavior that have resulted from Covid-19.

Before starting a business, entrepreneurs must be able to recognize the opportunity and themselves as having the skills, knowledge, and experience to start that business. While the pandemic had likely caused a decline in entrepreneurial opportunities in most of Europe and North America’s economies, some countries such as India, Oman and Saudi Arabia had four in five adults who saw good opportunities to start a business.

In all GEM economies, more than a third of those who see good business start-up opportunities agreed that they have the skills, knowledge and experience required. However, in eight of these economies (six from Europe and North America and Taiwan and Israel), more than half of those who see good opportunities disagree that they are able to capitalize on them. This again shows that business training for potential entrepreneurs, even in performing economies, is critical to developing a more entrepreneurial economy

Unfortunately, the study shows that the gap it closes in some countries still shows a gender divide in entrepreneurship, meaning that some economies are still lacking the incomes, jobs and value creation that go with equality could bring.

In relation to age, the propensity to start or run a new business tends to increase with age and then decrease. However, it is interesting to note that for the oldest age group (55-64 years), entrepreneurship actually increased than decreased in many more economies compared to 2019, while the opposite is the case for all other age groups. In fact, the elderly are still starting new businesses despite the fact that their health has been harder hit by the pandemic than other age groups.

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And what about the future? How has the pandemic affected the motivation of entrepreneurs around the world?

Much of the entrepreneurial populations from Europe and North America (as well as Latin America and the Caribbean) were motivated to start a business during the pandemic to “make a difference in the world,” suggesting that there will be change during the pandemic Pandemic has given rise to more purpose-driven businesses that add value to society and address some of the world’s greatest challenges.

In other Central and East Asian countries, as well as the Middle East and Africa, they are motivated to start a business in order to “build wealth or higher incomes,” which may reflect the economies in which these new businesses were founded.

The GEM study therefore again shows that entrepreneurship remains an important element of economies around the world. And while there are still challenges like closing the gender gap, those who take an opportunity and take the risk of starting a new business will help the global economy recover from the Covid-19 pandemic over the next few years be of vital importance years.