Silicon Valley and its plentiful success stories might make it easy to believe that when it comes to entrepreneurs, there’s no more welcoming country than the United States. The truth, though, is a bit different.
A new ranking of the world’s best countries for entrepreneurship from the Global Entrepreneurship Monitor (GEM) places the U.S. at number 11. The United Arab Emirates tops the list, by a significant margin. The Netherlands and Finland took the second and third spots.
“In the collective views of the surveyed experts, the United Arab Emirates, with the highest NECI (National Entrepreneurial Context Index ) score of 6.8, may be the best place to start a new business,” the report reads. “In 2016, the United Arab Emirates embarked on a new strategy, emphasizing entrepreneurship as a means of diversifying its economy away from oil production. Since that time … the country has reached a sustained, higher level of entrepreneurial activity.”
The rankings come from an amalgamation of factors, ranging from whether there are sufficient funds for new start-ups and the ease of access to them to educational support of entrepreneurship to market dynamics, infrastructure and societal/cultural norms (and their encouragement of entrepreneurs).
GEM spoke with over 2,000 experts to gather the data, speaking with at least 36 per country. Wealthier countries, as you might expect, performed better on the scale, which is (in part) how the UAE performed as well as it did. The country, however, showed improvements in 11 of the 13 categories GEM focuses on for its National Entrepreneurial Context Index (NECI) score.
UAE scored a 6.8 in the rankings. The U.S. came in at 5.3.
“The United States improved on many framework conditions in 2021. Unfortunately, many of the country’s scores remain below average within its peer group,” the report reads. “The country’s governance-related conditions, however, received low scores compared to peer economies, even if scores improved from 2020. This indicates further need for targeted entrepreneurial programs from the federal government that are accessible and offer worthwhile compensation.”
Here’s how the Top 11 countries ranked.
- United Arab Emirates
- Saudi Arabia
- Republic of Korea
- United States
The U.S. score of 5.3 is consistent with how the country has performed the past two years. UAE saw a dramatic jump from 5.8 to 6.8 in that two year span. The Netherlands had the same 6.3 score for 2020.
Last year, like 2020, saw the ongoing impact of the pandemic on start-ups. While household incomes have declined (which sometimes prevents entrepreneurs from chasing their vision), people’s interest in starting their own company has never been higher. That said, over 50% of would-be start-up owners said starting a business had become more difficult in 18 of the 47 economies studied.
In most economies, men are more likely to start new businesses than women. Entrepreneurs tend to skew younger and have a graduate level of education. And good news for would-be American start-up owners: While the U.S. didn’t rank as high as some might hope, the GEM report notes that’s not slowing down the entrepreneurial spirit.
“The rate of new business registrations, as calculated by the US Census Bureau, also increased dramatically during this time, beyond pre-pandemic levels,” it said. “While business registrations are not a perfect measure of entrepreneurship, this is further evidence that the United States is experiencing a strong entrepreneurial response. While some of the United States’ entrepreneurs may have chosen this route due to economic necessity, many have done so because of opportunity.”
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