Global Entrepreneurship and Development Index 2012
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Global Entrepreneurship and Development Index 2012

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 79 of the most important countries in the world.
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Chapter 3: Methodology and Data Description

Zoltán J. Ács and László Szerb


In the previous two chapters, we have analyzed the Global Entrepreneurship and Development Index (GEDI) from a contextual point of view (Chapter 1) and from a development perspective (Chapter 2). In this chapter, we are concerned with methodological issues. Index-building is a complex task that faces several potential pitfalls, starting with the vague and various definitions of a concept like entrepreneurship. We favor a complex perception of entrepreneurship and believe that this complexity requires a complex index, as opposed to the single measures often used. While we provide an exact description of entrepreneurship, in practical terms it is closer to a permeable frame than a closed box. Our approach to entrepreneurship involves four important aspects. First, we view entrepreneurship as a concept of quality rather than quantity. Second, we consider both institutional and individual factors vital in measuring entrepreneurship. Third, measuring the pillars of entrepreneurship is based on a benchmark of the best existing achievement for each particular pillar. And fourth, we view the building blocks of entrepreneurship, the 14 pillars, not as independent but as integrated elements of a system. We believe that the performance of the overall system depends on the weakest pillar, and that a good performance in one pillar can substitute only partially for a badly performing element of the system. A practical application of this theory is the newly developed penalty for bottlenecks (PFB) methodology. The individual variables are calculated by including more than 350,300 individuals from the 79 countries of the Global...

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