×

Nationalism is not putting a damper on this trillion-dollar sector

The antiglobalization sentiment that heavily influenced the U.S. presidential election and Brexit makes it essential to accelerate global interest in entrepreneurship, according to a report released today.

The 2017 edition of the Global Entrepreneurship Index, which is being released today in connection with the start of Global Entrepreneurship Week, has found there is a "race to the top," with leaders passionate about economic growth driving their countries' efforts to foster entrepreneurship, according to Jonathan Ortmans, a senior fellow at the Kauffman Foundation, which promotes entrepreneurship, and president of the Global Entrepreneurship Network, which produces the index with the Global Entrepreneurship and Development Institute in Washington, D.C.

However, it is important to continue to democratize entrepreneurship, given "rising nationalism driving a nationalistic movement sweeping America and the European Union as countries threaten to tighten their borders and reexamine free trade, the report says.

There is a strong correlation between a country's score in the index and its GDP and a country's digital evolution, according to the report, which found that improving the conditions that support entrepreneurship by 10 percent could add $22 trillion to the global GDP.

"It's all about competing for job creation and economic growth," Ortmans said.

The GEW this year ranked 155 countries on the health of their entrepreneurial ecosystem. The top 10 countries, ranked by the quality of entrepreneurship and the extent and depth of their supporting global ecosystems, are (1) the United States, (2) Switzerland, (3) Canada, (4) Sweden, (5) Denmark, (6) Iceland, (7) Australia, (8) the U.K., (9) Ireland and (10) the Netherlands.

Switzerland, which was in eighth place last year, saw the most dramatic rise among the countries in the top 10, with its score driven by the quality of local start-ups and "very strong" scores in high-growth firms, product innovation and the application of new technologies.

Both China and India, where the middle class is growing, also saw significant growth. China jumped 12 places on the list, to No. 48, while India landed at No. 69, rising by 29 places.

"The good news for the global economy is both China and India are strengthening their entrepreneurial ecosystem," given their large populations, said Zoltan Acs, a professor in the School of Public Policy at George Mason University and founder and president of the Global Entrepreneurship and Development Institute (GEDI). Together India and China are home to more than one-third of the world's population.

Belize, a nation on the eastern coast of Central America that is suffering from high unemployment and a heavy foreign-debt burden, suffered the biggest decline in its score, dropping 36 points to No. 113 on the list. Argentina, struggling with weak economic growth and high unemployment, saw the second biggest drop, diving 22 spots to No. 83.

The bottom of the list was dominated by developing countries. Chad, an African country that is heavily dependent on volatile oil revenue and plagued by corruption, was No. 137, in last place on the list.

Public sector embraces entrepreneurship

This year 169 countries are celebrating GEW, with 10,000 people expected to take part in 35,000 events, activities and competitions. U.S. embassies and consulates are planning and participating in events in 75 countries to help strengthen their economies. The events will culminate in a finale in Cork, Ireland, at the Startup Nations Summit, where a new tool will be unveiled to help policymakers around the globe share innovative policies and programs that are helping entrepreneurs start high-impact companies.

"We're now seeing a much larger number of public-sector leaders — government at the national and local level — jumping in and asking, `How do we tackle this and build stronger entrepreneurial ecosystems?' whether from rudimentary things like business regulations improvement, focusing on an R&D innovation agenda, a more sophisticated way to raise early stage financing or high-skilled immigration," said Ortmans. "They are all now experimenting. That is having a bigger impact on early stage entrepreneurship."

Some new developments include U.S. government plans to form a policy staff secretariat to host a ministerial summit on entrepreneurial growth each March, as well as the expansion of Startup Nations communities around the world.

One percolating trend has been greater interest among entrepreneurs in entering highly regulated industries, such as health care, energy and education, to solve problems in those sectors, according to Ortmans.

"This army of entrepreneurs is putting themselves to work on new problems," he said. "The new problems are the much harder ones to crack."

"We're now seeing a much larger number of public-sector leaders — government at the national and local level — jumping in and asking, `How do we tackle this and build stronger entrepreneurial ecosystems?'" -Jonathan Ortmans, senior fellow at the Kauffman Foundation

How enterprising innovators are rushing to fill unexploited niches varies with the opportunities they spot across borders.

With the drought crisis afflicting many countries, William Janssen, 48, a Dutch entrepreneur who lives in Dubai, saw an opportunity to help. The mechanical engineer and his team came up with Desolenator, a solar-powered device for purifying water from any source, including seawater. His company, based in the U.K., is looking to launch its product in California and one other market next year.

"We have a very experienced international team of people who have worked across several continents," said Janssen, whose company won the Startup Open competition, part of Global Entrepreneurship Week, last year. "That is a prerequisite for us to be successful in our line of work."

Geert Slachmuylders, founder of Turbulent, an Antwerp-based start-up that created a micro-hydropower plant that provides clean energy, speaks at The Pitch, a live pitch competition during the 2015 Startup Nations Summit in Monterrey, Mexico.
Source: GED
Geert Slachmuylders, founder of Turbulent, an Antwerp-based start-up that created a micro-hydropower plant that provides clean energy, speaks at The Pitch, a live pitch competition during the 2015 Startup Nations Summit in Monterrey, Mexico.

Many of these globalists aim to help solve big societal issues. Massachusetts Institute of Technology Ph.D. student John Lewandowski, 26, is bringing innovation to the world of medical diagnostics. He is CEO and founder of Disease Diagnostic Group, a six-person start-up based in Boston and Buffalo, New York, that has developed a device for the rapid assessment of malaria.

The company, a finalist in last year's Startup Open competition, has so far tested the device — about the size of an iPhone case — in India and is looking to do larger clinical trials in Nigeria and Singapore later this year. "Getting the first prototype out there was challenging from a global perspective," says Lewandowski.

To cover the costs, Disease Diagnostic Group has funded its work largely through grants and the winnings from start-up competitions, raising $1.5 million to $1.75 million in non-equity cash to date, according to Lewandowski.

So far, its efforts are paying off. The company, which started about two years ago, expects $150,000 to $200,000 in revenue this year, says Lewandowski. "To have positive revenue at this point is definitely something that not a lot of start-ups have," he said.

The entrepreneurship movement is growing in all parts of the globe, thanks to emissaries who promote the benefits of start-up creation as a trigger for economic growth.

To encourage thought leadership in this field, the Global Entrepreneurship Network will this be awarding the Startup Nations Award for Groundbreaking Policy Thinking at the Startup Nations Summit in Cork, Ireland, on Nov. 19.

In addition to Zoltan Acs at GEDI, the finalists include Caleb Carr, 22, who started a nonprofit called Students for Intellectual Property Rights while studying at University of Colorado. His group lobbies to prevent universities from taking ownership of student start-ups created on their property and has provided legal help to students trying to defend their stake. Companies such as Google, Snapchat and Facebook faced challenges on this front.

"Universities have realized students can have the next big app or little piece of technology that can make millions," said Carr. "Universities want a piece of that."

Another finalist is Efka Heder, director of the South East European Centre for Entrepreneurial Learning in Croatia. Her organization, funded by the government of Croatia and the European Commission, has worked to bring entrepreneurship education to the population of eight Southern European countries. Results range from a program in which about 10 percent of kindergarteners in Croatia now get entrepreneurship education to one in Macedonia, which has begun testing entrepreneurial learning in state exams.

"Things are very simple," said Heder. "If you try to think in a future-oriented way, then the simple fact is the entrepreneurs of tomorrow are in our schools today. If we do not act today, things will not happen in the future."

— By Elaine Pofeldt, special to CNBC.com