UNDERSTAND | November 18, 2020

Index of Dynamic Entrepreneurship Explores Future Evolution of Ecosystems in Post-COVID World

IDE 2020
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A new report released by Prodem and the Global Entrepreneurship Network suggests that as governments gear to meet the challenges of the post-pandemic world, a new wave of entrepreneurial development strategies are expected to be implemented in the next three years. The resulting influx of resources will result in the emergence of new thriving ecosystems but also threaten to leave struggling ecosystems even further behind. 

The Index of Dynamic Entrepreneurship, released as part of Global Entrepreneurship Week when roughly 10 million people are participating in 40,000 events and activities in 180 countries, is intended to guide discussions between policymakers and ecosystem builders as they work together to reconfigure their economies. The report focuses on dynamic entrepreneurship – those projects and new firms that manage to survive their first years in business, grow significantly, or have the potential for expansion.

“We estimated the impact of COVID 19 on systemic conditions using our annual Index, and together with thought leaders in innovation and entrepreneurship, we analyzed a spectrum of positive and negative medium-term scenarios for entrepreneurship ecosystems,” said Prof. Hugo Kantis, Director of Prodem. “We invite ecosystem builders to use this report as a roadmap to anticipate these outcomes. Doing so will be key in building resilient entrepreneurial economies that can leverage positive trends and mitigate systemic risks.”

The Index analysis reveals that the impact of the pandemic reached a higher percentage of developed economies (90%), but the magnitude of the impact is more pronounced in developing countries due to their structural weaknesses and economic vulnerabilities. 

The authors contend that following an initial period where government interventions are constrained by budgetary and fiscal restrictions, resources in the medium-term (defined as three years) will target a much broader set of entrepreneur profiles, not just high-growth firms and unicorns. In doing so, they will turn to proven entrepreneurship support organizations and ecosystem builders with implementation capabilities.

The report surveyed 25 experts from around the world who encouraged ecosystem builders to consider the influence of seven trends:  

  • economic recovery will take time;
  • poverty and social inequality will increase;
  • the role of government in the economy will be more important than in the last
  • few decades;
  • financial liquidity will be high, and interest rates low;
  • consumption patterns and consumer habits will change;
  • technological change will be faster; and
  • global value chains will be reconfigured.

While necessity entrepreneurship will increase in some economies, a set of dynamic ecosystems will be able to capitalize on new opportunities emerging from the reconfiguration of global value chains, new consumption patterns, open innovation strategies and accelerated technological change. However, these dynamic ecosystems will have to confront the trend in investments where risk capital is increasingly concentrated on more advanced stages of business development and larger deals.  These are some of the results presented in the report that call for a smart and proactive design of public policies to foster entrepreneurship.

"The pandemic of 2020 was tailor made for a global response, but never got one. This Index will help policymakers and ecosystem leaders work together to build back our economies,” said Jonathan Ortmans, founder and president of the Global Entrepreneurship Network. “Entrepreneurs are natural leaders in times of disruption and we expect them to inspire new interventions and accelerate the transition to a post-COVID world.” 

The 2020 IDE covers 64 countries, assessing their economies at the beginning of 2020 and again mid-way through the year, after the global onset of the pandemic. Italy was most impacted, falling six spots from 38th to 44th, followed by: Philippines (-5, 46th to 51st); Russia (-4, 35th to 39th); China (-4, 23rd to 27th); Austria (-4, 11th to 15th); and the United Kingdom (-4, 10th to 14th). Conversely, Japan rose seven spots from 17th to 10th. 

The report is available for download at https://genglobal.org/research/ide

Cristina Fernández focuses on integrating policymakers into startup ecosystems across the world, creating platforms for them to exchange ideas… About the author