Uruguay, the best country in LatAm for starting a Business

Uruguay is considered the best country in LatAm for starting a business. Meanwhile, entrepreneurship in Ecuador remains in a high-rate.

Uruguay has ranked as the better country in Latin America for starting a business, according to the Global Entrepreneurship Monitor’s National Entrepreneurship Context Index (GEM NECI). According to the GEM, “the index measures the 12 entrepreneurial environment conditions (EFCs) that make up the context in which entrepreneurial activity takes place in a country”.

Aileen Ionescu-Somers, GEM Executive Director, pointed out that GEM examines the conduciveness of national conditions for all types of entrepreneurs. For that reason, the NECI is not about the conditions of a country’s economy as a whole. Ionescu-Somers give an example: financial conditions are related to financing options for entrepreneurs, not the financial sector of the country.

Entrepreneurs around the world are having a bad time

Alicia Coduras, the GEM National Expert Survey (NES) Coordinator commented that the GEM NECI results show evidence that European, American, and Latin American entrepreneurs have been suffering substantial negative impacts due to the pandemic. Overall, the average scores of the NECI this year are somewhat low in general. 

However, Asian markets were overall more positively impacted because they have become important suppliers of essential products and technologies to the world. Developments in emerging economies are worth closely monitoring in a world that is changing at an increasingly accelerated pace because of the pandemic.

As an example, the GEM India study provides a wide sample of experts that has enabled consistent results over the last few years indicating that India is strongly emerging in different and powerful sectors (pharmacy, space technology, and others) even though the country as a whole remains in the low-income group. 

Uruguay was the best performer in Latin America, beating European countries such as Austria and Spain, and positioning below Germany. The best country for entrepreneurs was Indonesia.

Entrepreneurship and Unemployment are growing in Ecuador

Unemployment in Ecuador remains in a high-rate. However, this case is the same for entrepreneurship, according to the GEM.

Xavier Basantes commented in the Ecuadorian newspaper El Comercio that Ecuador remains one of the countries in the region with the highest rates of early entrepreneurial activity, above Peru and Chile. This is an indicator that is taken into account when preparing the GEM Report (Global Entrepreneurship Monitor), which shows where nations are in this field. That report was presented this week and one of the conclusions is that in the country, until 2019, three out of every ten adults undertook. As in previous years, one of the main observations is that these ventures are driven by necessity; that is to say, they are initiatives that arise from the fact of looking for some subsistence mechanism to generate income. And that conclusion is also seen when, among the reasons that lead people to undertake, is the lack of formal employment. And that is evident in the balance that the pandemic has left in the labor market so far. Between March and June, 270,000 people left the coverage of the Ecuadorian Social Security Institute, and of that figure, 40% correspond to young people, between 21 and 30 years of age. After that, some range between 31 and 40 years. In the world, covid-19 caused a “disproportionate” impact on young people, according to the International Labor Organization (ILO). One in six under the age of 29 is unemployed. Due to situations like this and in a latent scenario that economic recovery, not only in the country, will take years, evidently that will lead more people to promote ventures out of necessity. In any case, it is also necessary to take advantage of this new moment and seek to undertake business due to market opportunity. And there it is possible to promote associativity strategies or seek to fill that void that, unfortunately, due to the effects of the pandemic, many businesses have left. In situations like these, the concept of reinventing yourself is not alien, the goal is to get ahead now.

Further reading

LatAm countries are lagged in tech

Last Huawei ranking 2020 Global Connectivity Index showed that LatAm countries need to invest more in tech development. Chile is the best performer.