Programa de Desarrollo Emprendedor

Entrepreneurship as an engine of sustainable development (IDE 2022)

This report comes at a key moment to provide evidence that can guide policymaking and development agendas across entrepreneurial ecosystems. In the aftermath of the Covid-19 pandemic, the world is navigating a context characterized by sharp contrasts. On the one hand, the acceleration of technological progress has favored the emergence of opportunities for start-ups and young companies, particularly in the digital and high-tech sectors. At the same time, there is a record number of young companies reaching unicorn status in 2021, i.e. reaching a valuation of at least $1 billion. This phenomenon is in turn associated with record levels of venture capital investments.

However, we are also witnessing deeper disparities in levels of economic and social development, which widened the gap between advanced and developing countries. In fact, according to the latest United Nations report, progress made toward the achievement of the Sustainable Development Goals (SDGs) is seriously threatened.

In this context, the promotion of dynamic entrepreneurship finds an overriding purpose in the SDGs, given its potential to contribute to their achievement. But for this potential to unfold, a set of systemic conditions favorable to dynamic entrepreneurship must be in place.

As such, this 2022 edition of the IDE report includes a specific analysis of the relationship between the SDGs, systemic conditions, and dynamic entrepreneurship. We found a virtuous circle in this relationship, which confirms the relevance of entrepreneurship as an engine for economic, social, and environmental transformation. This virtuous circle also re-emphasizes the importance of developing systemic conditions for dynamic entrepreneurship, given that these conditions are associated with the Sustainable Development Goals.

The report also shares the results of the Index and the ranking of conditions for entrepreneurship at a global level, with the following highlights:

1. For the first time, the Netherlands surpassed the United States at the top of the ranking. Germany, Norway, and Sweden complete the list of the top five countries in the global ranking for dynamic entrepreneurship.

2. These countries stand out from the rest mainly through their strengths in conditions that facilitate the materialization of entrepreneurship projects into new companies, as well as their subsequent development. In this regard, the top coutries in the ranking stand out in particular for having very favorable social capital for networking, above 80 points.

3. Most of the countries (two out of three) registered recovered demand conditions in the post-pandemic period. Nearly half of the countries analyzed also show progress in terms of entrepreneurial human capital and cultural conditions for entrepreneurship, associated with the greater appreciation of entrepreneurs as agents for progress and social, economic, and environmental transformation.

4. The financing dimension also shows a favorable evolution, driven largely by the 2021 investment boom, which doubled the amounts of 2020. However, this boom in the venture capital industry is not uniform across regions of the world, given that it is heavily concentrated in the United States (with half of the amounts invested and a third of the investments closed) and across six other ecosystems (China, India, Israel, the United Kingdom, Germany, and France).

5. The policies and regulations dimension is the only one that shows a clear decline vis-à-vis last year, as a consequence of their lower priority in government agendas compared to emergency-related policy areas to respond to the pandemic and global economic downturn.

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