ABSTRACT
There are wide spatial variations in business formation rates. Variations across countries are highlighted by the Global Entrepreneurship Monitor (GEM) studies. The 2002 GEM study which covered thirty-seven countries, shows that the Total Entrepreneurial Activity (TEA) prevalence index – defined as the percentage of the labour force involved in setting up or running a new business – varied from 18.7 in Thailand to only 1.8 in Japan (Reynolds et al., 2002, p. 4). The same study shows (p. 10) wide variations across regions of the world, with the highest rates occurring in Latin America and the developing Asian economies. Within countries, there is also considerable spatial variation. Reynolds et al. (1994), using annual firm births per 10,000 persons as their measure of regional birth rates, show that the ratio of the highest to the lowest rate was at least 2.2 in each of the six countries they looked at and was as high as 4.1 in the United States.
