New business density (new registrations per 1,000 people ages 15-64)

Definition: New businesses registered are the number of new limited liability corporations registered in the calendar year.

Description: The map below shows how New business density (new registrations per 1,000 people ages 15-64) varies by country. The shade of the country corresponds to the magnitude of the indicator. The darker the shade, the higher the value. The country with the highest value in the world is Hong Kong SAR, China, with a value of 31.30. The country with the lowest value in the world is Niger, with a value of 0.00.

Source: World Bank's Entrepreneurship Survey and database (http://econ.worldbank.org/research/entrepreneurship).

See also: Country ranking, Time series comparison

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Development Relevance: Entrepreneurship is a critical part of economic development and growth and important for the continued dynamism of the modern economy. To measure entrepreneurial activity, annual data is collected directly from 139 company registrars on the number of newly registered firms over the past seven years. The data shows the trends in new firm creation across regions, the relationship between entrepreneurship and the business environment and financial development, and the financial crisis' effect on the entrepreneurial activity in the formal sector. Private sector development and investment - tapping private sector initiative and investment for socially useful purposes - are critical for poverty reduction. In parallel with public sector efforts, private investment, especially in competitive markets, has tremendous potential to contribute to growth. Private markets are the engine of productivity growth, creating productive jobs and higher incomes. And with government playing a complementary role of regulation, funding, and service provision, private initiative and investment can help provide the basic services and conditions that empower poor people - by improving health, education, and infrastructure.

Limitations and Exceptions: The definition of entrepreneurship used is limited to the formal sector. Yet, it should be noted that the exclusion of the informal sector is based on the difficulties of quantifying the number of firms that compose it, rather than on its relevance for developing economies. The Entrepreneurship Database facilitates the analysis of the growth of the formal private sector and the identification of factors that encourage firms to begin operations in or transition to the formal sector. Data is collected all limited liability corporations regardless of size. Partnerships and sole proprietorships are not considered in the analysis due to the differences with respect to their definition and regulation worldwide. Data on the number of total or closed firms are not included due to heterogeneity in how these entities are defined and measured. The data itself only provides a snapshot of a given economy's business demographics, and cannot by itself explain the factors that affect the business creation cycle. However, when the Entrepreneurship Database is combined with other data such as the Doing Business Report, Investment Climate Assessments, and/or OECD Entrepreneurship Indicators, researchers and policymakers can better understand the dynamics of the business creation process. The Entrepreneurship Database is a critical source of data that facilitates the measurement of entrepreneurial activity across countries and over time. The data also allows for a deeper understanding of the relationship between new firm registration, the regulatory environment, and economic growth. Previous research using the Entrepreneurship Database has shown a significant relationship between the level of cost, time, and procedures required to start a business and new firm registration.

Statistical Concept and Methodology: The new business entry density, which is the number of newly registered limited liability corporations per calendar year, normalized by working age population. This is a valuable indicator which quantifies the impact of regulatory, political, and macroeconomic institutional changes on new business registration, a vital component of a dynamic private sector. The data includes all limited liability corporations regardless of size. Partnerships and sole proprietorships are not considered in the analysis due to the differences with respect to their definition and regulation worldwide. Data on the number of total or closed firms are not included due to heterogeneity in how these entities are defined and measured. To facilitate cross-country comparability, the Entrepreneurship Database employs a consistent unit of measurement, source of information, and concept of entrepreneurship that is applicable and available among the diverse sample of participating economies. The data collection process involves telephone interviews and email correspondence with business registries in 139 economies. The main sources of information for this study are national business registries. In a limited number of cases where the business registry was unable to provide the data - most often due to an absence of digitized registration systems - the Entrepreneurship Database uses other alternatives sources, such as statistical agencies, tax and labor agencies, chambers of commerce, and private vendors or publicly available data. The units of measurement are private, formal sector companies with limited liability.

Aggregation method: Unweighted average

Periodicity: Annual

General Comments: For cross-country comparability, only limited liability corporations that operate in the formal sector are included.