• Again, the main barrier is education

• Financial support from the private sector is what would have the most effective impact on entrepreneurship

On Tuesday, April 18th, at SOFOFA headquarters, the main association of entrepreneur at Chile, was launched the Global Entrepreneurship Monitor (GEM), a report that contains the results of the status of entrepreneurship in Chile and the main barriers preventing its development. Ingrid Antonijevic, Secretary of Economy, was present at the event, accompanied by Cristian Larroulet, Dean of the School of Economics and Business of Universidad del Desarrollo, and Enrique Ostalé, Dean of the Business School of Universidad Adolfo Ibáñez, among other authorities. According to Universidad Adolfo Ibáñez and Universidad del Desarrollo, the report’s authors, entrepreneurship in Chile is at levels below those of 2003.

The Global Entrepreneurship Monitor is sponsored by Babson College and London Business School.  For information, visit www.gemconsortium.org

There is a standstill in entrepreneurship despite government efforts to promote it and despite the greater number of opportunities arising from economic development and free-trade treaties signed by Chile. According to José Ernesto Amorós, a researcher with the Center for Entrepreneurship and Innovation of Universidad del Desarrollo, "the economic growth in the past three years has helped reduce the level of necessity entrepreneurship—which is when individuals are forced to become entrepreneurs because they have no other choice—from 6.7% of the population to 2.9%." These results are similar to those of developed countries and reveal that the nation is creating more attractive jobs.

However, one discouraging sign is that opportunity entrepreneurship has also decreased, which is related to economic development. And that is what is typically found in more developed countries like New Zealand, the United States, Australia, Canada or Ireland. This indicator went from 8.5% of the population to 8.2%. According to Amoros, it is worrisome that opportunity entrepreneurship in Chile, in addition to having fallen, is very focused on not very innovative projects that have a low growth potential, which have a very low economic impact. That is why, he says, "incentives must be created for entrepreneurship to aim at being innovative and creating new industries, setting down the foundations for a greater economic development."

In the opinion of Germán Echecopar, a researcher at Universidad Adolfo Ibáñez, "Chile is making efforts to change this situation and support innovative entrepreneurship, but there are still major barriers." The study showed that the principal barrier is education, which was evaluated as the lowest of nine variables and stands out because no personal initiative is encouraged nor creativity in generating projects or being entrepreneurial. Secondly, there are government programs, but they are not focused on promoting research and development that have a commercial impact. Another barrier considered critical by entrepreneurs is that there are not yet any financing vehicles appropriate to the needs of each stage of entrepreneurship. "A greater commitment and coordination between the government and the private sector is needed to overcome these barriers," said Echecopar.

Based on the GEM results, the researchers proposed that the design of government solutions rely more on the private sector to make decisions and allocate resources to entrepreneurship. In fact, the seed capital facility of Corfo has only financed 132 projects in the last five years (only 2 projects per month), which is clearly not enough to have an impact on the economy. Like in successful experiences in more developed countries, the government should accompany the private sector when it commits to high-impact projects rather than decide which projects are worthy of financing. As the private sector fulfills its commitments, it should continue to receive support. This would create competition among entrepreneurs to meet the proposed goals and allocate resources to projects and entrepreneurs who demonstrate a true greater potential.