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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
  1. 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
  2. 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
  1. TEA for males declined approximately 1% (from 10.7% to 9.8%)
  2. TEA for women increased approximately 1.5 % (from 6.1% to 7.5%)
  3. 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):
  1. 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