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

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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

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CHAPTER 3 3.1 Introduction Methodology and data description 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...

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