Entrepreneurial Activity in Puerto Rico Decreased in 2015
SAN JUAN – In an event held Friday at the University of Puerto Rico’s Río Piedras Campus, the latest island data related to the Global Entrepreneurship Monitor (GEM), a global survey that measures entrepreneurial activity in 60 countries, were announced.
GEM is the most important longitudinal study conducted on entrepreneurship. Puerto Rico has participated continuously since 2013, through a team of researchers from the Río Piedras campus. Each year, a sample of 2,000 adults in Puerto Rico is surveyed, and 36 experts on entrepreneurship are consulted.
The following are highlights from Puerto Rico’s results for 2015:
– Plans to launch businesses in the coming years has decreased. The latest drop compares with 13% of respondents in 2013 and 12% in 2014. The 11% result for 2015 is a fairly typical figure for an innovation-based economy, which Puerto Rico is considered. In fact, the survey identified that a significant proportion of the population, 6.6%, took a specific step aimed at creating a business venture, which GEM defines as an emerging entrepreneur.
– Entrepreneurial development still low: When compared with indicators for economies similar to that of Puerto Rico, the large difference is the proportion of the population that has developed a business that has gone past the phase of creation and has operated from three months to 3.5 years. This is what GEM considers a new venture. Only 1.9% of respondents owns or manages a new business.
Puerto Rico ranks 58 out of the 60 countries that participated in the survey in 2015, which includes both formal and informal businesses. In 2014, the figure was even lower, at 1.3%.
– Puerto Rico has the lowest number of companies: As a cumulative result of the low number of new businesses created, coupled with the closure of companies, Puerto Rico has the lowest number companies among the 60 countries surveyed: only 1.4% of the population owns or is the administrator of a company that is more than 3.5 years old.
These figures contrast with other local results: Half of respondents believe they have the ability to start a business, and only 18% of those who perceive there are opportunities to start a business indicate that fear of failure would be an obstacle to starting a business.
In fact, fear of failure has decreased significantly in recent years. The global report highlights Puerto Rico as one of the places with the most positive figures in this indicator.
-Perception of opportunity: Only 25% of respondents believed a good opportunity to start a business would arise in the coming months.
Although it is recognized the media pay great attention to entrepreneurial activity, being an entrepreneur in Puerto Rico does not have the social prestige observed in other countries. Less than half of the population consider those who succeed in starting a business as enjoying a higher status or respect, and only 17% of respondents believe being an entrepreneur is a good career choice (the lowest proportion among participating countries). Despite efforts by various public and private entities in changing these attitudes, no positive change was observed during the survey period (2013-2015).
Bureaucracy, taxes and government regulations in Puerto Rico are considered by the experts consulted in 2015 as one of the biggest obstacles to business development. They coincide with experts consulted in previous years. Although it is generally a negatively valued factor internationally, in very few countries is the perception as critical as in Puerto Rico. Notably, 32% of respondents who recently closed a business attribute it to bureaucratic problems, constituting the main reason given for businesses closing in Puerto Rico. In an international comparison, two other weakness stand out: entrepreneurship education in primary and secondary schools; and the commercialization of innovations and technology transfer.
The full GEM report for Puerto Rico will be available in August at http://gem.uprrp.edu. The presentation was led by the research team of Marta Álvarez, Marinés Aponte and Manuel Lobato. The presentation and GEM Puerto Rico activities during 2016 are funded by the UPR’s Río Piedras Campus with the support of the Puerto Rico Statistics Institute and Banco Popular’s “Pa’lante” initiative.