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Entrepreneurship

The data collection for entrepreneurship project was completed in June 2017. To measure entrepreneurial activity, annual data was collected directly from 143 company registrars on the number of newly registered firms. The data can help answer such questions as these:

  • What are the trends in new firm creation across regions and income groups?
  • What is the relationship between entrepreneurship and the business environment and financial development?
  • How much did the financial crisis affect entrepreneurial activity in the formal sector?
  • What is the relationship between gender and entrepreneurship?

Data are provided on new business entry density, defined as the number of newly registered corporations per 1,000 working-age people (those ages 15–64). As in the World Bank’s annual Doing Business report, the units of measurement are private, formal sector companies with limited liability.

 

Methodology

What is the Entrepreneurship Database?
The Entrepreneurship Database is a unique source of comparable, cross-country data on new business registration aimed at facilitating a greater understanding of the dynamics of private enterprises around the world. The main Entrepreneurship Database indicator measures new business entry density, which is the number of newly registered firms, in which ownership liability is limited to its investment, per calendar year, normalized by population. This is a valuable indicator which quantifies the impact of regulatory, political, and macroeconomic institutional changes on new business registration, a vital component of a dynamic private sector. The 2017 Entrepreneurship Database introduces a new approach to measuring entrepreneurial activity with a gender dimension. Specifically, the Entrepreneurship Database collected comparable data on the number of new female and male LLC owners and sole proprietors.

Nevertheless, it should be noted that the data itself only provides a snapshot of a given economy’s business demographics, and cannot by itself explain the factors that affect the business creation cycle. However, when the Entrepreneurship Database is combined with other data such as the Doing Business Report, Investment Climate Assessments, and/or OECD Entrepreneurship Indicators, researchers and policymakers can better understand the dynamics of the business creation process.

Data Collection 
The Entrepreneurship Database and Doing Business have jointly developed a data collection methodology to systematically measure entrepreneurial activity. The 2017 Entrepreneurship Database contains annual data on the number of newly registered firms over the period of 2006-2016. To facilitate cross-country comparability, the Entrepreneurship Database employs a consistent unit of measurement, source of information, and concept of entrepreneurship that is applicable and available among the diverse sample of participating economies.

The data collection process involves telephone interviews and email correspondence with business registries. See complete list of sources. The main sources of information for this study are national business registries. See complete list of sources. In a limited number of cases where the business registry was unable to provide the data – most often due to an absence of digitized registration systems – the Entrepreneurship Database uses other alternatives sources, such as statistical agencies, tax and labor agencies, chambers of commerce, and private vendors or publicly available data. 

Definition of the Variables
The definition of entrepreneurship used is limited to the formal sector. Yet, it should be noted that the exclusion of the informal sector is based on the difficulties of quantifying the number of firms that compose it, rather than on its relevance for developing economies. The Entrepreneurship Database facilitates the analysis of the growth of the formal private sector and the identification of factors that encourage firms to begin operations in or transition to the formal sector.

Newly Registered Companies with Limited Liability: The main input for calculating the new business entry density rate is the number of newly registered companies with limited liability (or its equivalent), per calendar year. Importantly, limited liability is a concept whereby the financial liability of the firm’s members is limited to the value of their investment in the company. It is a separate legal entity that has its own privileges and liabilities. This study collects information on all limited liability corporations regardless of size. Partnerships and sole proprietorships are not considered in the analysis due to the differences with respect to their definition and regulation worldwide. Data on the number of total or closed firms are not included due to heterogeneity in how these entities are defined and measured.

Business Entry Density Rate: The number of newly registered firms with limited liability per 1,000 working-age people (ages 15-64) per calendar year.

Population: The main source of information for the population numbers used in the Entrepreneurship Database is the World Development Indicators. The working-age population is based on what the International Labour Organization defines as the economically active population. If the population data were not available in the World Development Indicators; other sources such as the CIA and the Index Mundi were used.

Offshore financial centers:  Data collected from countries categorized as offshore financial centers by the IMF (1) are marked as such and generally excluded from Entrepreneurship Database analysis since registered entities in these countries may not fit our definition of entrepreneurship. The information provided by these countries likely reflects a nontrivial amount of shell companies, defined as companies that are registered for tax purposes, but are not active businesses.

Time
Time is recorded in calendar years. The measure captures the new companies with limited liability that have been registered per calendar year, allowing collection of periodical statistics for the period 2006-2016.

Download the questionnaire instrument used in the data collection cycle of DB2018 (PDF, 280KB) 

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1. Data collected from economies categorized by the International Monetary Fund as "Offshore Financial Centers" are excluded from the analysis. Current list of OFC countries.