Latin American. Entrepreneurs

Transcription

1 Latin American Entrepreneurs Many Firms but Little Innovation Daniel Lederman, Julian Messina, Samuel Pienknagura, and Jamele Rigolini m THE WORLD BANK Washington, D.C.

2 Contents Foreword Acknowledgments Abbreviations xi xiii xv 1. Overview 1 Entrepreneurship is a driver of development 1 Entrepreneurship is vibrant but growth is weak 4 The region has many entrepreneurs but little Innovation 7 Few companies enter export markets 10 Even large multinational corporations in the region are insufficiently innovative 13 How can policy enable innovative entrepreneurs? 16 Structure of the report 20 Notes 20 References Entrepreneurship, Entry, and the Life Cycle of Firms in Latin America and the Caribbean: Are All Forms of Firm Creation Entrepreneurial? 23 Low-level entrepreneurs, high-level entrepreneurs, and employees 24 Theoretical framework 26 Business creation in Latin America and the Caribbean 38 Beyond entry: Firm dynamics in Latin America and the Caribbean 42 What is hindering high-growth entrepreneurship: Culture, institutions, or the environment? 49 Notes 54 References Entrepreneurship by Incumbent Firms: What Explains the Innovation Gap? 61 What drives Innovation? A conceptual framework 63 How innovative are firms in Latin America and the Caribbean? 67 What explains the innovation gap? 73 Notes 89 References 90

3 Vi CONTENTS 4. Export Exporting as a transformative entrepreneurial act ^6 Contribution of export entrepreneurship in the medium term 98 Descriptive benchmarking of export entrepreneurship Econometric benchmarking of export entrepreneurship 112 Export promotion policies Concluding remarks Notes References 5. Foreign Direct Investment, Multinational Corporations, and Innovation 121 Foreign multinational corporations in Latin America and the Caribbean 123 Multilatinas 131 Concluding remarks 136 Notes 1^6 References Toward an Enabling Environment for Innovative Entrepreneurs 141 What are the elements of an enabling environment for innovative entrepreneurs? 142 What explains the region's Innovation gap? The leading suspects 149 Notes 1-50 References 151 Boxes 2.1 Main databases used in the study Do training programs for entrepreneurs work? Comparing firm size across age cohorts in Colombia using Enterprise Surveys and administrative data Importing entrepreneurs: Start-Up Chile Risk, laws, macroeconomics, and the innovation gap in Latin America and the Caribbean Management matters: How better practices could increase productivity in Latin America and the Caribbean Do's and don'ts of entrepreneurship ecosystems Can a whale in a swimming pool create a splash? Intel and the upgrading of tertiary education in Costa Rica 129 Figures 1.1 Type of employment, by GDP per capita Innovation edge of medium and large Rrms over small Arms in Latin America and the Caribbean, Relationship between type of employment and GDP per capita, Firm dynamics: entry, age, and size Employment growth in Colombia, by firm size and age Percentage of firms in selected countnes introdticing a new product, Investment in research and development (R&D) in selected country groups, Number of patents per capita granted by U.S. Patent and Trademark Office, actual and benchmarked, by inventor's country or place of residence Management practices in selected economies Average entry and one-year survival rates in selected countries (differences with respect to baseline) _ Y Sources of export growth in selected countries, and

4 CONTENTS VÜ 1.12 Innovation edge of foreign multinational corporations over local firms in Latin America and the Caribbean Predicted productivity gains from entry of new multinational corporations in selected country groups, countries, and economies Spending on research and development (R&D) in Latin America and the Caribbean Sectoral position of foreign subsidiaries relative to headquarters in selected country groups, countries, and economies, Actual and benchmarked index of competition in 17 nontradable industries in selected countries or economies Income and engineering density in selected economies, Number of engineers per million people in selected countries Actual and benchmarked index of intellectual property rights in selected countries or economies, Model of entrepreneurship Occupational choice and GDP per capita, Income distribution in Latin America and the Caribbean by type of occupation, circa Rate of formal business ownership in selected country groups, countries, and economies, Share of firms with no employees in selected country groups, countries, and economies, Distribution of firm size in selected country groups, countries, and economies, Push versus pull entrepreneurship in selected country groups, countries, and economies, New firm entry rates and GDP per capita in selected countries, Time required to Start a business in selected country groups, countries, and economies, 2004 and Relationship between business formality and barriers to entry in selected countries, various years Employment growth in Colombia, by firm size and age cohort Net employment growth rates by firms in Colombia, by establishment age and size, B2.3.1 Employment in establishments in Colombia, by age of establishment Firm size in Latin America and the Caribbean, by age of firm, Age distribution of top 100 firms in selected country groups Share of business establishments in Argentina owned by foreigners, Entrepreneurship among immigrants and natives in the United States, by type of business and country Marginal effects of years in United States on entrepreneurship gap between migrant and nonmigrant white men, by cohort of arrival and region Extensive and intensive margins of Innovation Percentage of firms in selected countries that introduced a new product in the past year Average Investment in research and development, by region and level of GDP, Number of patents per capita granted by U.S. Patent and Trademark Office, actual and benchmarked, by inventor's country or place of residence 69 B3.2.1 Correlation between management quality and productivity in selected countries and economies Management practices in selected countries or economies Distribution of overall management score: in Brazil and the United States 72

5 VÜi CONTENTS 3.7 Relationship between Investor protection and time required to register property and Innovation in Latin America and the Caribbean Döing Business in selected country groups and countries, circa 2004 versus Relationship between competition and various aspects of Innovation in Latin America and the Caribbean Appointment of head of regulatory agency in Latin America and the Caribbean Level of allowed government intervention in regulatory decisions Scope of action of regulatory agencies in Latin America and the Caribbean Transparency practices of regulatory agencies in Latin America and the Caribbean Maximum fines imposed by regulatory agencies in selected countries in Latin America and the Caribbean Credit, Investment, and Innovation in Latin America and the Caribbean Depth of financial systems in selected country groups and countries, 1993 and Private equity and venture capital Investments, by region, Number and size of private equity and venture capital deals in Latin America and the Caribbean, by country, Access to credit, by region and age of firm Likelihood of spin-off firm after five years, by type of entrant Engineering density and GDP of selected countries, Actual versus perceived management quality in Argentina, Mexico, Chile, and Brazil Domestic versus international spillovers in patenting activity Strategie objectives of export promotion agencies, by region Share of total exports accounted for by new export entrants in seven countries in Latin America and the Caribbean, Share of total exports accounted for by continuous exporters in seven countries in Latin America and the Caribbean, Export growth and its components in selected countries, and Product entry, exit, and first-year survival rates of ineumbent exporters in selected countries, and Size of new product exports relative to ineumbent produets in selected countries, and Export growth of ineumbent exporters in selected countries and its decomposition along the product dimension, and Destination entry, exit, and first-year survival rates of ineumbent exporters in selected countries, and Exports to new destinations as a share of total exports by ineumbent exporters in selected countries, and Export growth of ineumbent exporters in selected countries and its decomposition along the destination dimension, and Conditional benchmarking of export entry rates by sector, Conditional benchmarking of one-year export survival rates by sector, Conditional benchmarking of export entry rates in selected countries, Conditional benchmarking of one-year export survival rate in selected countries ! Conditional benchmarking of export entry and one-year survival rate in selected countries after Controlling for GDP per capita and comparative advantage, Partial effects of 1 percent increase in index of revealed comparative advantage on export entrepreneurship indicators in seven countries in Latin America and the Caribbean, c

6 CONTENTS ix 5.1 Inward foreign direct Investment and multinational activity in Latin America and the Caribbean Difference in number of patents held by multinational parent and local firms in home country in selected country groups, countries, and economies, Difference in Innovation between multinational affiliates and local firms in the host economy in Latin America and the Caribbean, Product Innovation by foreign multinational affiliates in selected country groups and economies, Research and development by foreign affiliates of U.S. multinational corporations in selected regions, 1998 and Sources of predicted productivity gains associated with entry of multinational corporations, by country groups, countries, and economies, Share of total revenues of multilatinas by country or country group of origin, Actual and benchmarked revenue of multinational corporations in selected countries and economies, relative to given characteristics, Factors driving Brazilian firms to cross borders, Sectoral position of foreign subsidiaries relative to headquarters in selected country groups, countries, and economies, Origin of revenues of multilatinas, Management practices by firms in the United States and selected countries in Latin America and the Caribbean, by type of firm Research and development by multinational corporations in selected country groups, countries, and economies, Actual and benchmarked access to credit by young firms in selected countries Actual and benchmarked index of intellectual property rights in selected countries or economies, Actual and benchmarked contract certainty in selected countries or economies, Actual and benchmarked index of competition in 17 nontradable industries in selected countries or economies Actual and benchmarked index of openness to trade in selected countries, Actual and benchmarked share of engineers in selected countries, Tables 2.1 Socioeconomic characteristics of business owners in selected country groups, countries, and economies Dynamics of manufacturing firms in Colombia Five-year changes in size categories for establishments of different ages in Chile and Colombia Firm characteristics in Latin America, the United States, and China Number of new and incumbent exporters in seven countries in Latin America and the Caribbean, Export growth by new entrants and incumbents in seven countries in Latin America and the Caribbean, Treatment effects of export promotion agencies in seven countries in Latin America and the Caribbean Factors that may account for innovation deficits in 13 countries in Latin American and the Caribbean,