Business start-up rates continue to recover but remain relatively weak in Euro area | WPN World People News

Business start-up rates in OECD countries have generally risen since the crisis - particularly in Australia and the United Kingdom - but they remain below pre-2008 levels in many Euro area economies.

The OECD’s latest Entrepreneurship at a Glance report says the services sector continues to drive the creation of new businesses overall.

Start-up rates in construction, although high, fell in most countries in 2012, the latest year for which internationally comparable data is available. In Portugal, for instance, 10% of construction jobs were lost in 2012 through failures or closures. The number of jobs created in new Portuguese construction businesses was less than a third of those lost. In most OECD countries, the construction sector has shed nearly half the number of jobs it had before the crisis.

The number of firms and jobs in manufacturing fell in most OECD countries between 2008 and 2012. Only in Germany did employment grow in the manufacturing, business services and construction sectors.

The report says young enterprises are important conduits to higher productivity through innovation and creative destruction. They accounted for between 4% and 12% of total employment in most countries in 2012. However, low survival rates in the tougher market and tighter financing conditions since the crisis have meant that their contribution to overall employment remains generally weaker than before 2008. Latest data show that in many countries the average size of young enterprises changed relatively little over their first three years.

Wide differences exist between countries in the diversity of their firm’s export markets, the report says. Although around 90% of the value of German and UK exports are made by companies exporting to more than ten markets, nearly three-quarters of German firms export to only one market, twice the rate of UK firms. In general, trade remains regional, with small and medium-sized enterprises (SMEs) in particular tending to export disproportionally more to neighbouring countries. In a number of nations, such as Spain and the Netherlands, the contribution of SMEs to trade with emerging economies, notably China and India, is significant and growing.

Larger firms are on average more productive than smaller ones, particularly in the manufacturing sector, partly reflecting gains from increasing returns to scale through, for instance, capital-intensive production. But the report says some smaller firms often outperform larger ones, pointing to competitive advantages in niche, high-brand or high-intellectual property content activities. The intensive use of affordable information and communication technologies also plays a key role.

Entrepreneurship at a Glance publishes findings from the OECD-Eurostat Entrepreneurship Indicators Programme, started in 2006.

Source: Organization for Economic Co-operation and Development