Women Entrepreneurs Are Key to Long-term Economic Growth

Increasing the number of women entrepreneurs involved in starting new businesses is critical for a country's long-term economic growth, according to the GEM global study on entrepreneurship. In a previous look at this study, "Entrepreneurism Spurs Economic Growth," we saw how entrepreneurism as a whole is good for a country's economy. Looking at what specific factors in entrepreneurism are important to economic growth uncovered some interesting results.

The Global Entrepreneurship Monitor 2000 (GEM), a 21-country study of entrepreneurship and economic growth, found that most firms are still started and operated by men, with peak entrepreneurial activity among those aged 25-44. Overall, men are twice as likely as women to be involved in entrepreneurial activity worldwide. The interesting finding in this study for women, however, is the degree to which women engaged in entrepreneurship varies between countries and what that means to each country's economic growth.

In France, the ratio of male to female participation is twelve-to-one, the lowest level of female entrepreneurism, as compared to less than two-to-one in Brazil, the countries with the highest level of women ventures. While male entrepreneurism dominates in every country in the study, entrepreneurism as a whole is highest in Brazil while France has one of the lowest levels of entrepreneurism. Across the spectrum, entrepreneurism flourishes when women are actively involved in entrepreneurism in the country.

Future Implications

The need to encourage more women and individuals outside the 25-44 age group to become more involved in entrepreneurship is about the impact of population demographics on entrepreneurial activity. An expanding population leads to an increased demand for goods and services with the escalating demand resulting in greater numbers of entrepreneurial opportunities.

According to Paul Reynolds, GEM project coordinator and a professor at both Babson College and the London Business School, the GEM analysis reveals that those countries experiencing high levels of economic activity project population growth of 20 percent over the next 25 years, while those countries currently with the lowest level of entrepreneurial activity project no change in the size of their populations during this time frame.

According to the GEM study, the economic growth of a country is directly correlated to its level of entrepreneurial activity. In particular, there is a high correlation of economic growth and entrepreneurial activity among the industrialized G7 countries.

"Entrepreneurship makes a difference to economic prosperity, and a country without high business start-up rates is risking economic stagnation," said Michael Hay, a GEM project director and professor at the London Business School. "Countries that are able to replenish the stock of businesses and jobs and have the capacity to accommodate volatility and turbulence in the entrepreneurial sector are best placed to compete effectively."