Capital Access Index 2006 Gauging Entrepreneurial Access to Capital Max = 10 9.0 Hong Kong 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 40 Source: Milken Institute United Kingdom U.S. India China Brazil Russia
Ease of Doing Business Top 10 Economies Country 2007 Ranking 2005 Ranking Singapore 1 3 New Zealand 2 1 United States 3 2 Canada 4 8 Hong Kong, China 5 4 United Kingdom 6 7 Denmark 7 12 Australia 8 5 Norway 9 6 Ireland 10 15 Source: The World Bank
United Kingdom Canada Ireland Norway Sweden Finland Australia New Zealand United States Slovak Republic Luxembourg Denmark Portugal EU* Italy Japan Hungary Germany Iceland Greece Spain France Belgium Austria Netherlands Korea Switzerland Czech Republic Mexico Poland Turkey Barrier to Entrepreneurship By Country, 1998 vs. 2003 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Source: OECD Entrepreneurship Outlook 2005 1998 2003 1998 average 2003 average
Structure of Medium and Small Enterprise (MSME) Sector Percent of Total MSME Sector 100 90 80 70 60 50 40 30 20 10 0 U.S. U.K. Japan Germany Brazil India Israel S. Africa Source: World Bank Mi S ll M di
MSME Participation in the Economy By Income Group MSMEs per 1,000 people 40 35 30 34.5 28.8 29.2 25 20 21.7 15 10 5 0 Source: World Bank Low Lower middle Upper middle High
MSME Participation in the Economy Selected Countries MSMEs per 1,000 people 100 80 73.8 67.8 60 40 20 0 Source: World Bank 48.8 44.7 38.3 27.4 22.0 20.0 Israel Japan Brazil U.S. India U.K. Russia Germany S. Africa China 6.3 0.3
MSME Contribution to Employment MSMEs employment, % of total 100 88.0 78.0 80 67.0 66.9 60 40 50.9 50.5 39.6 39.0 20 0 Source: World Bank Israel Japan Brazil U.S. India Japan Brazil U.S. U.K.
Cost to Start SMEs is Larger in Low Income Countries Source: World Bank
Cost to Enforce A Contract is Larger in Low-Income Countries Source: World Bank
High Income Countries Have Better Access to Credit Source: World Bank
Favorable Investment Climate is Associated with Greater Presence of SMEs Source: World Bank
Impediments to SMEs: Time to Start a Business Source: World Bank
Impediments to SMEs: Large Cost to Start A Business Source: World Bank
Impediments to SMEs: Limited Access to Private Credit
Impediments to SMEs: Unfriendly Investment Climates
Capital Access Index, 2006 70,000 60,000 GDP per Capita, US$ 50,000 40,000 30,000 20,000 10,000 y = 6,821x - 21,731 R 2 = 0.6308 0-10,000 0 1 2 3 4 5 6 7 8 9 Sources: World Economic Outlook and Milken Institute Less access More access C it l A I d
Cost of Opacity, 2005 70 60 Opacity Index Premium/Discount 6.63% China 9.45% Nigeria 10% 8% Opacity Index 50 40 30 20-1.63% UK -0.48% HK 0.00% USA 5.76% India 6.00% Russia 6% 4% 2% 0% Premuim/Discount 10-2% 0-4% Source: Milken Institute, 2006
Inward FDI Stock Top 20 Economies 2002-2004 2002-2004 Rank Economy Percent of World Total Rank Economy Percent of World Total 1 United States 17.42 11 Ireland 2.60 2 United Kingdom 7.47 12 Australia 2.47 3 Fra nce 6.23 13 Ita ly 2.17 4 Netherlands 5.33 14 Mexico 2.13 5 Hong Kong, China 4.76 15 Switzerland 1.96 6 Germany 4.73 16 Sweden 1.94 7 Spain 4.04 17 Singapore 1.82 8 Be lgium 3.98 18 Bra zil 1.61 9 Ca nada 3.35 19 De nm a rk 1.19 10 China 2.81 20 Russian Federation 1.16 * Inward FDI Stock is based on US$. Source: United Nations Conference on Trade and Development
Business Entry Rate and Density By Region, 2003 Percent 14 12 10 8 6 4 2 Entry Rate Business Density LAC: Latin America and the Caribbean 0 Asia Middle East & Africa LAC Europe Sources: The World Bank, U.S. Census, U.S. Small Business Administration US Development All Countries Entry Rate = New Firms / Total Firms, Business Density = Total Firms / Population
GDP Levels and Growth Rates Per Capita GPD Gap vis-à-vis the U.S., Percent Gap in the Average Growth Rate 1995-2005 4 IRL 3 POL HUN SVK KOR FIN 2 LUX TUR CZE GRC ESP SWE AUS 1 NOR MEX PRT NZL BEL EU19 FRA DEU ITA JPN CAN DNK 0 AUT -1 Gap in GDP per Capita Relative to the U.S. in 2005-105 -95-85 -75-65 -55-45 -35-25 -15-5 5 15 25 35 Source: OECD Economic Policy Reforms: Going for Growth, 2007-2
Contributions of Capital Investment Labor Intensive Growth vs. Capital Intensive Growth, 1995-2004 5 PRT GRC Capital Services Growth Rate 4 3 JPN DNK FRA CAN ITA AUT DEU USA SWE GBR AUS IRL 2 NZL BEL 1 NLD 0 FIN Labor Productivity Growth Rate -1 0 1 2 3 4 5 Source: OECD Economic Policy Reforms: Going for Growth, 2007
Administrative / Economic Regulations By Country, 2003 3.5 Administrative Regulations 3.0 Correlation Coefficient = 0.47 t-statistic =2.8 TUR POL 2.5 CZE CHE MEX 2.0 AUTNLD ESP BEL GRC ISL KOR DEU JPN ITA LUX FRA 1.5 SVK PRT HUN NZL FIN USA IRL SWE 1.0 AUS NOR DNK GBR CAN 0.5 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Source: OECD Entrepreneurship Outlook 2005 Economic Regulations
Complexity of Administrative Procedure By Country,1998 vs. 2003 2003 5.0 4.5 OECD Average 4.0 3.5 TUR 3.0 CHE 2.5 2.0 NZL IRL NLD ISL CZE DEU DNK BEL OECD Average 1.5 1.0 POL EU15 PRT GBR USA NOR AUS FRA FIN SWE JPN KOR CAN GRC 0.5 HUN ITA ESP MEX AUT 0.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 1998 Source: OECD Entrepreneurship Outlook 2005
Contributions of ICT / Non-ICT Capital to Growth of Capital Services 1995-2004 Percent 10 8 6 4 2 0 Total ICT Total Non-ICT ICT : Information Communication Technology -2 ITA JPN GRC FIN BEL PRT DNK GBR SWE DEU AUT FRA ESP NLD NZL CAN IRL AUS USA Source: OECD Economic Policy Reforms: Going for Growth, 2007
Policy Issues Easing regulatory and administrative burdens Creating business-friendly regulatory environments Increasing administrative simplications through facilitating information technology mechanisms Setting ambitious targets through accelerated company registrations Improved labor market flexibility and taxation measures Smoother business transfer and bankruptcy process Fostering entrepreneurship culture Education and training Source: OECD Entrepreneurship Outlook, 2005
Thomas Friedman s 7 Rules for Companies Coping with the Flattening World Rule #2: And the small shall act big One way small companies flourish in the flat world is by learning to act big. And the key to being small and acting big is being quick to take advantage of all the new tools for collaboration to reach farther, faster, wider and deeper. Rule #3: And the big shall act small One way that big companies learn to flourish in the flat world is by learning how to act really small by enabling their customers to act really big. Source: Friedman, Thomas L. 2005. The World is Flat: A Brief History of the Twenty-First Century. Farrar, Straus and Giroux
Small to Mid-sized Business in U.S. 99% of Employers 70% of Net New Jobs 51% of Private Sector Workers 50% of GDP Source: Small Business Administration/ White House 2004/2005
World Trade Total Value of Export US$ Trillions 10 8 6 4 2 0 85 Source: IFS 90 95 00 05
World Trade Export as Percent of GDP Percent of GDP 30 28 26 24 22 20 18 16 85 Source: WEO 90 95 00 05E
Number of U.S. Exporting Companies Quadruples 250,000 Number of SMBs Exporting 200,000 150,000 100,000 50,000 0 1994 2004 Source: U.S. Department of Commerce
SMBs Globalize in Various Ways 40% 38% 35% 30% 29% 25% 20% 17% 17% 15% Export Import Outsource External Office or Affiliates Source: Vistage International Poll 2006
Cross-Border Merger and Acquisition Sales 1995 and 2005 Developed Countries Asia Latin America East Europe Africa/Middle East Middle East World 1995 143,854 5,978 7,998 7,098 773 428 166,128 2005 607,472 54,854 34,873 57,101 9,066 5,125 768,489
Most Significant Business Issue/ Challenge Canada Malaysia U.K. U.S. Finding, Hiring, Retaining Staff #1 #1 #1 #1 Source: Vistage Index 2005*/2006