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The Global Entrepreneurship and Development Index (GEDI) Some Comments

The Global Entrepreneurship and Development Index (GEDI) Some Comments. Niels Bosma Department of Economic Geography, Utrecht University Global Entrepreneurship Research Association DIME Conference: Regional innovation and growth: Theory, empirics and policy analysis University of Pécs

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The Global Entrepreneurship and Development Index (GEDI) Some Comments

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  1. The Global Entrepreneurship and Development Index (GEDI)Some Comments Niels Bosma Department of Economic Geography, Utrecht University Global Entrepreneurship Research Association DIME Conference: Regional innovation and growth: Theory, empirics and policy analysis University of Pécs Pécs, Hungary, March 31-April 1, 2011

  2. The GEDI: Measurement and Usage • Link between entrepreneurship and development • Dynamic interaction of three components • Entrepreneurial attitudes • Entrepreneurial activity • Entrepreneurial aspirations • Each component consists of the product of a ‘prevalence rate’ (based on individuals perceptions and actual behaviour) and a number on the institutional context - which is also an index in some cases • Why would ‘we’ need an index on entrepreneurship? • Entrepreneurship is a multi-faceted phenomenon; why try to capture this in one number • Appealing to policy makers and useful for establishing the weakest links • Creating the index of a ‘mechanism’ is not an easy task... • Entrepreneurship is a process and supposed to be a vehicle for growth • Entrepreneurs as drivers, policy makers as mechanics? • Do countries compete in different races? Is there a ‘best’ vehicle? • Positive correlation with GDP and other indices: by construction, in particular from institutional variables • Impossible for less developed countries to score high on the index, even if they have a superb entrepreneurial climate

  3. Limitations & suggestions • The products of ‘individual’ and ‘institutional’ variables • Sense of arbitrariness: more compelling evidence needed that the components are indeed critical ones – and that the product is a good representation of the combined effect. • Underestimation of the individuals (and entrepreneurs in particular): it is basically assumed that entrepreneurs do not know much about their own context – it is projected on them. • Theoretically one would assume that the institutional setting partly determines particular entrepreneurial attitudes, activity and behaviour (that may be productive/unproductive) • More evidence to be collected in support of assumed relationships – could lead to re-evaluation of components • The role of innovation – used but not recognized as such • Demographic issues (age structure, population growth, ...) • Theoretical background links innovation / entrepreneurship mechanism to growth, not to levels of economic development • Deviations from trend with GDP more interesting than the trend itself • Emphasis on entrepreneurship in new firms; entrepreneurial behaviour within established/larger firms not considered

  4. The interaction of institutions and individual perceptions / behaviour Unproductive Entrepreneurship? Score: 0.25 Score: 0.10

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