Public Policy In The United States: GEM 2008
Previous GEM reports have noted that public policies toward entrepreneurship in high-income countries have several major goals:
- maintaining competitiveness
- sustaining innovation rates, and
- encouraging the availability of sufficient early stage funding
Highlights of the GEM study which particularly pertain to public policy include the following observations:
The impact of the recession and the financial crisis was observed in several key areas:
- In 2008 a number of industries showed declines in growth rates, with the largest percentage losses occurring in the Construction and Wholesale Trade Industries
- In 2008 there was a dramatic decline in the GEM National Experts’ assessment of the availability of sufficient funding for entrepreneurs from key funding sources in the United States
- In 2008 there was a decline in the GEM National Experts’ perceptions concerning the existence of good opportunities to create new firms both now and in the last five years
- The trend of reductions in the dynamism levels (the ratio of early-stage entrepreneurship to business ownership) in the United States observed in 2006 and 2007 continued in 2008
- But we should note that the drop in the dynamism level in 2008 was due for the most part to a change in the survey methodology which resulted in a significant upward adjustment to the established business rate
- Nevertheless, the dynamism numbers are of interest because high levels of dynamism are positively associated with high early-stage entrepreneurship prevalence rates and high venture capital investment
But it’s important to note that there were positive signs in 2008 as well:
- In 2008, the gender gap between male and female prevalence rates declined
- TEA for males declined approximately 1% (from 10.7% to 9.8%)
- TEA for women increased approximately 1.5 % (from 6.1% to 7.5%)
- One implication is the positive impact on the economy that this increase in women starting businesses could have
- Optimistic expected 5-year job projections from start-up businesses were observed in 2008, especially for high potential entrepreneurs (those entrepreneurs who expect to create 20 or more jobs in 5 years):
- 25% of the startup businesses in 2008 expect to create 20 or more jobs in 5 years
Overall: while the short-term outlook for entrepreneurs is challenging, the longer-term outlook is positive.
Julian Lange, Associate Professor
Governor Craig R. Benson ’77, H’03 Professor of Entrepreneurship and Public Policy