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Where Innovation Is Tradition

For press releases issued after to Jan. 20, 2012, see http://newsdesk.gmu.edu/category/press-releases/

U.S. Tops Latest Ranking of Entrepreneurial Nations

Jan. 4, 2012

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Fairfax, Va. – The United States is the best country in the world to start a business, according to the 2012 Global Entrepreneurship and Development Index (GEDI), a ranking that compares entrepreneurial characteristics of 79 nations and identifies the entrepreneurial strengths and weaknesses of their economies. Rounding out the top ten are Sweden, Australia, Iceland, Denmark, Canada, Switzerland, Belgium and Norway with the Netherlands and Taiwan tied for tenth. A summary of the 2012 GEDI can be found at http://eagle.gmu.edu/newsroom/files/GEDI.pdf.

The annual index, now in its second edition, is a collaboration between George Mason University, University of Pecs and Imperial College Business School, London. This year’s index was produced by Zoltan Acs, professor and director of the Center for Entrepreneurship and Public Policy at George Mason University's School of Public Policy and László Szerb, associate professor of business and economics at the University of Pecs in Hungary. The authors provide this information to help international leaders understand the entrepreneurial climate of their countries’ economies and foster productive entrepreneurship through new policies.

“If governments think that entrepreneurship is important, they promote it through their policies, including supporting education, increasing commercialization and making finance available to start businesses,” Acs says. “The basic question we are trying to answer is: What is the incentive structure in a particular country and how do the country’s residents respond and behave to those policies?”

To compile the index, researchers survey people around the world and gather information from countries related to 15 separate variables, including quality of the education system; likelihood of corruption; amount of research and development; and government incentives related to starting a business. Using these variables, the index takes the average of three sub-indices that measure entrepreneurial attitudes, entrepreneurial activity and entrepreneurial aspirations. The GEDI uses a scale of 0.0 to 1.0 and takes into account that the lowest scores from the variables may drag down the overall score to more accurately reflect the complexity of entrepreneurship.

“Entrepreneurship is a multidimensional phenomenon. The GEDI combines the variables in a way that considers the factors where the country is weakest,” says Acs. “Unless you fix the weakest link in the chain, the chain breaks. The factors related to entrepreneurship work the same way. Governments must recognize and improve the areas where they are weak in order to foster a culture of innovation in their country.”

The United States, while leading the list, has a long way to go to regain lost ground, according to the report. “The U.S. is a society in distress with communities hurting across the country,” Acs says.  “This does not bode well for American entrepreneurship. Entrepreneurship does not emerge from sick societies. It emerges from healthy societies.”

The report also notes that the drivers of entrepreneurship have deteriorated across the globe. On a scale of 0.0 to 1.0, productive entrepreneurship declined to 0.60 from 0.67, or about a 10 percent drop overall. This drop was larger in the developed world than in the developing world, reflecting the deteriorating institutional conditions in wealthy countries. Because of these factors, the potential for productive entrepreneurship has fallen worldwide.

Other interesting observations in the index include:

* While the global economic crisis has hurt entrepreneurship in most countries, including the United States, the effect on individual countries varied greatly.

* Hungary, the United Arab Emirates and Uruguay are tied for having the largest gain since last year at 0.06. Australia, Tunisia, Chile, Jamaica, Croatia, Israel and Turkey had the next largest gains.

* Asian countries China, India, Korea and Malaysia had large declines in entrepreneurship.

* The United States is the only country in the top three in all three sub-indices, but does not rank first in any category.

* The top three countries in the entrepreneurial attitudes sub-index are Sweden, the United States and Australia.

* The top three countries in the entrepreneurial activity sub-index are Australia, the United States and Canada.

* The top three countries in the entrepreneurial aspirations sub-index are Israel, Taiwan and the United States.

About George Mason University
George Mason University is an innovative, entrepreneurial institution with global distinction in a range of academic fields. Located in Northern Virginia near Washington, D.C., Mason provides students access to diverse cultural experiences and the most sought-after internships and employers in the country.  Mason offers strong undergraduate and graduate degree programs in engineering and information technology, organizational psychology, health care and visual and performing arts. With Mason professors conducting groundbreaking research in areas such as climate change, public policy and the biosciences, George Mason University is a leading example of the modern, public university. George Mason University—Where Innovation Is Tradition.

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