► Across EU, entrepreneurs have generated 67% of new job openings in 2012
► US, Australia, Canada, South Korea and UK are the most entrepreneur-friendly countries
With many countries continuing to face high levels of unemployment and challenges in economic growth, EY’s G20 Entrepreneurship Barometer 2013 (Entrepreneurship barometer in G20 countries) calls on governments, ahead of the G20 Leaders Summit next week, to collaborate with entrepreneurs in order to kick-start their economies and create jobs.
The study assesses entrepreneurship and ranks the G20 country across five “pillars” of the entrepreneurial ecosystem: access to funding, entrepreneurship culture, tax and regulation, education and training, and coordinated support. The barometer is based on a survey of over 1,500 leading entrepreneurs and qualitative data on entrepreneurial conditions across the G20. It also draws extensively on EY’s own research of more than 200 government leading practices
The barometer provides more than 40 key recommendations for governments, entrepreneurs and corporations to improve the conditions for entrepreneurship to stimulate growth and jobs.
Mature countries lead the way but rapid-growth markets are catching up
Across the G20, mature countries score highest overall on the barometer for providing the best ecosystems for entrepreneurship.
When ranked across all five categories, Australia, Canada, South Korea, UK and US lead the G20 in the upper positions. The US leads in terms of access to funding and entrepreneurship culture and France is top for education and training. However, rapid-growth markets are closing the gap and making the fastest improvements to their entrepreneurial environments. Saudi Arabia is perceived to be the most attractive in terms of tax and regulation due to its low corporate tax rates and simplified regulations. Within the final pillar, providing “coordinated support”, including mentoring and best practice exchanges, Russia scores highest, followed by Mexico and Brazil.
Job creation and youth unemployment
Entrepreneurs represent two third of employment in the G20 and they are a critical engine for job creation, including youth employment. Across the EU it was estimated that entrepreneurs supplied 67% of all new jobs in 2012 , while in China the figure was even higher at 75%.
Access to funding top priority for action
Access to funding is cited as the top priority for global action by 70% of entrepreneurs, who agree that obtaining finance remains difficult as their businesses grow and develop. The barometer highlights that governments should create a range of mechanisms and institutions that provide entrepreneurs with capital at every stage of growth, alongside providing support and mentoring, which is essential to enable entrepreneurs to use this capital effectively.
The US ranks highest overall for providing access to funding, followed by UK and China. Thus, while in the US only 15% of entrepreneurs report that it is very difficult to find funding, in countries such as Italy and Argentina this figure is much higher at 45% and 40%, respectively.
Access to early-stage funding is starting to improve, with the US, Canada and Australia as well as Saudi Arabia and Indonesia performing well in providing funding for start-ups.
On the other hand, 83% of entrepreneurs agree that an innovation focused tax incentive would improve entrepreneurship in their countries. For example, in Canada, entrepreneurs can recover 50% of all their research and developments’ expenses, regardless of profit or loss.
Call to action for governments
Alongside financial improvements, there is a clear message from entrepreneurs from G20 nations for cultural change in order to remove the stigma of failure, champion entrepreneurship and promote united thinking in policy and business environments.
US entrepreneurs have a relatively low fear of failure. In fact, 43% of US entrepreneurs see business failure as a learning opportunity, which compares to the G20 average of 23%. Relatively low insolvency implications also support US entrepreneurs in trying new ventures. In order to better understand the challenges ahead, the report also advises governments to conduct a self-assessment of their own entrepreneurial landscape to ensure that the correct strategies and policies are in place.
Bogdan Ion, EY Romania Country Managing Partner says: "The message across the G20 countries is clear: governments, entrepreneurs and corporates have to work together to further develop the business environment. A similar conclusion was also reached at the beginning of this year in Romania, when EY released an analysis of the same five pillars for the Romanian business environment. After launching the study in Bucharest, we maintained relations with entrepreneurs and also organised meetings in Timisoara and Cluj to specifically discuss their needs.
These discussions led to many constructive ideas. Among these, in terms of regulation and taxation, entrepreneurs consider the need to: simplify procedures and tax regulations, urgently professionalize civil servants, drastically reduce bureaucracy and ensure a predictable fiscal environment. Regarding education, entrepreneurs believe that entrepreneurship training should be started as early as possible, even from primary school, and should be taught by entrepreneurs.
Moreover, entrepreneurs consider that the image they have in Romanian culture and society should be re-established through media dissemination of Romanian businessmen success stories. This way, a chance in mentality can be produced not only among the general public or public servants comming into contact with entrepreneurs, but mostly among those who set policies and public measures for entrepreneurship and should value the important contribution entrepreneurs have demonstrated to have for the economies around the world."
After the first edition of the Entrepreneurship Barometer - Entrepreneurs speak out, conducted in early 2013 in Romania, EY Romania prepares its second edition for 2014, which will measure Romanian entrepreneurs’ perceptions across the five pillars of entrepreneurial ecosystem: access to funding, entrepreneurship culture, tax and regulation, education and training, and coordinated support.
Also in 2014, EY Romania will join the largest competition worldwide dedicated to entrepreneurs, World Entrepreneur of the Year. The Entrepreneur Of The Year program was first started by EY in 1986, in the United States and since 1993 it has been extended internationally. Currently, EOY runs in over 50 countries.
About the EY study
Launched ahead of the G20 Leaders Summit in St Petersburg next week, the EY G20 Entrepreneurship Barometer 2013 (www.ey.com/G20ey) is a new way of ranking every G20 country across five “pillars” of the entrepreneurial ecosystem: access to funding, entrepreneurship culture, tax and regulation, education and training, and coordinated support. The barometer is based on a survey of over 1,500 leading entrepreneurs, qualitative data on entrepreneurial conditions across the G20 and notes on the business environment from more than 250 entrepreneurs, experts and representatives of academia. It also draws extensively on EY’s own research of more than 200 government leading practices.
About EY Romania
EY is one of the world's leading professional services firms with approximately 167,000 employees in 700 offices across 140 countries, and revenues of approximately $24.4 billion in 2012. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, EY has been a leader on the professional services market since its set up in 1992. Our over 450 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. From 1 July 2013, Ernst & Young becomes EY, the logo has been modified in response to this change and the company's new tagline becomes "Building a better working world". The new visual identity reflects the new strategy of EY, Vision 2020. For more information, please visit www.ey.com.