Global Entrepreneurship and Development Index 2011
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Global Entrepreneurship and Development Index 2011

Zoltán J. Ács and László Szerb

The Global Entrepreneurship and Development Index both captures the context features of entrepreneurship and fills a gap in the measurement of development. Building on recent advances in entrepreneurship and economic development, the authors have created an index that offers a measure of the quality of the business formation process in 71 of the most important countries in the world.
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Chapter 2: Entrepreneurship and Economic Development

Zoltán J. Ács and László Szerb


Between 1945 and 1980, nearly 100 colonies in Africa, Asia and the Caribbean gained their independence and began creating a development strategy for their citizens.1 Sadly, many of those countries experienced neither significant per capita growth nor economic development.2 Indeed, moderate and extreme poverty remain significant concerns for many developing countries.3 While these countries used a number of policies and strategies in their pursuit of development, two forms of industrial policy were particularly prominent. The first was import substitution, a process of industrializing by producing previously imported goods for the domestic market. By the 1980s, facing financial crisis, many developing countries turned to the second strategy, export promotion. However, with the exception of some countries in East Asia, neither strategy has resulted in meaningful economic development. Both approaches relied on strong state intervention and persistent market distortions to sustain their viability, which often crowded out or altogether thwarted the traditional and important role of the entrepreneur. Hence, after failed attempts at development through import substitution and infant industry protection programs, and somewhat mixed results from export promotion strategies, developing countries are beginning to focus on their business environments and on creating economic spaces conducive to private enterprise, both domestic and foreign. Indeed, the promotion of entrepreneurship and the promulgation of small and medium-sized enterprise (SME) policy has become an important development prescription in recent years. Entrepreneurship policy, then, joins a list that includes reforms to countries’ macroeconomics, exchange rates, trade and industrial policies, and improvements in governance. As...

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