Peru has highest Business startup rate worldwide

Peru ranks top in Entrepreneurship(LIP-wb) — According to 2006 Global Entrepreneurship Monitor results, Peru has has the highest percentage of adults engaged in early-stage entrepreneurial activity with 40.2 percent whereas Belgium ranks last with 2.7 percent.

In the United States, slightly more than 10 percent of adults are starting or running a new business, according to the report (-download pdf file (2.14 MB) here-). That’s down from 12.4 percent a year ago, but within the statistical margin of error, according to GEM researchers.

The Peruvian rate is almost identical to that (40.3%) measured in 2004 and is, once again, the highest level measured among participating GEM nations. About 74% of the entrepreneurial activity is motivated by opportunity rather than out of necessity. As in 2004, women’s participation (49% of total activity) in entrepreneurial activities is virtually the same as that for men (51% of total).

The report explains that Peruvians are very creative and when facing adverse conditions, will rapidly engage in almost any (usually small) entrepreneurial activity to survive; they cannot expect governmental support to help them find jobs or get any sort of allowance.

Although legal and political stability are no longer the main problems, government policies create legal and administrative difficulties in constituting and operating a company. These difficulties give rise to the informal economy with the disadvantages that it causes for the growth and consolidation of the new ventures.

The possibility of a Free Trade Agreement with the United States and other countries has led to the promotion of entrepreneurship. Universities, NGOs, private companies, financial institutions, public institutions and the media, have been organizing a number of forums, conferences, courses, and other activities to encourage business start-up.

In recent times, the business sector has begun maturing and recognizing that to be competitive they must value the interests of the population, the consumer and the government, whilst the population is becoming more proactive and less reliant on the government in solving their problems.

During the last few years a new breed of entrepreneurs has emerged. They are common people, who are emerging from almost every part of the country and because of their success they are becoming the new icons and role models of society, the report analyzes.

http://filer.livinginperu.com/news/img/business_startup2.jpg757425Starting a business in Peru isn't easy either
Starting a business in Peru sometimes requires hard labor
© LivinginPeru

It can be said that the great deal of entrepreneurial activity in Peru is developed, despite the lack of a coherent and organized policy. It is necessary to simplify the procedures related to the obtaining of licenses and permissions to create new companies.

Peruvian experts suggest the creation of a ‘unique window’ and a time determined period of tax exoneration, thereby enabling reinvestment and the growth of the companies.

Changes are also required to the education system, which needs to move towards one that promotes an entrepreneurial culture, fostering initiative and creativity. This new system should allow for the application of knowledge for the creation of new companies.

It is also necessary to promote the development of formal venture capital that would provide the financial resources needed to start new businesses. Currently, funding is generally from informal sources, which are very limited and small.

In every country except the Philippines, men are more likely to start a business than women. However, the gender gap is most pronounced in high-income countries.

Individuals, ages 25 to 34, are the most likely to start new businesses; adults in the 55 to 64 age range are the least likely.

The Global Entrepreneurship Monitor (GEM) research program, directed by Babson College and the London Business School, is an annual assessment of the national level of entrepreneurial activity. Initiated in 1999 with 10 countries, expanded to 21 in the year 2000, with 29 countries in 2001 and 37 countries in 2002. In 2006 GEM conducted research in 39 countries.

(Source: GEM Global Summary 2006, published by Global Entrepreneurship Monitor -link-)