Global Entrepreneurship Index Methodology Analysis of Switzerland

2021-05-27 21:56:07
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George Washington University
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The Global Entrepreneurship Index (GEI) is a regular index that is employed to measure a countrys status of the entrepreneurship ecosystems. GEI is used among 137 nations and it is used on an annual basis. It ranks the performance of the nations entrepreneurship ecosystems against each other. The results of the GEI portrays how a nation performs in business in both the domestic and international markets. The methodology attains data pertaining the entrepreneurial aspirations, attitudes as well as abilities of the local population. The collected data is then weighed against the existing social and economic infrastructures in the nation such as broadband connectivity as well as transportation channels to external markets. This essay is a GEI analysis of Switzerland that focuses on the nations entrepreneurial profile, strengths, weaknesses, individual and institutional profiles as well as a comparison of the nation with Sweden, Denmark, and Canada.

GEI for Switzerlands Entrepreneurial Profile

According to the GEI Report 2014, Switzerlands economic profile has grown significantly in comparison to the nations GEI in 2011. This massive economic development can be attributed to various economic factors present in the nation. Such include the existence of a high proportionate of startups with innovative products in the market CITATION Ste162 \l 1033 (Kyora, 2016). There is the presence of a high number of startups with goods and services in the niche market characterized by a less competitive market environment CITATION Ste162 \l 1033 (Kyora, 2016). Switzerlands market is also characterized by the existence of highly qualified labor force as well as the availability of abundant formal as well as informal venture capital CITATION SGe15 \l 1033 (S-Ge, 2015).

The improved entrepreneurial profile in Switzerland also illustrates that innovative and active startups in the niche markets venture into international trade early CITATION Fin16 \l 1033 (FinTech, 2016). Such an expansion immensely supports the growth of the startups in terms of the scale of operation and their profitability. Past research on Switzerlands entrepreneurial profile has indicated that majority of startups owners do not start their establishment for the supreme purpose of strong growth. Instead, most of the entrepreneurs in the nation establish their entities with the primary focus of developing a unique or innovative product in the market CITATION Swi16 \l 1033 (Switzerland Innovation, 2016). In addition, the level of risk acceptance, as well as the availability of venture capital in the nation, is remarkably surprising.

This phenomenon can be attributed to the argument that most startup founders in the nation are not immensely ambitious. As such, they normally accept the risk of business failure when starting a business since in most cases the risk is relatively low CITATION Dav16 \l 1033 (Sidler, 2016). The strong performance in venture capital in the nation can be accredited to the highly developed financial sector in Switzerland. Most monetary lending corporations are supportive of the startups owners when starting innovative businesses in the nation, and at a relatively fair rate of return (ROR) on the capital borrowed CITATION Tra16 \l 1033 (Trading Economics, 2016). Such corporations also offer the startup owners convenient payback period to repay the borrowed capitals.

Switzerlands Strengths According to GEI 2015 and 2016

Switzerland has continued to be the leading nation over the years in terms of its economic performance. Some of the nations strengths are associated with its market efficiency as well as innovation CITATION Sta13 \l 1033 (Startup Ticker, 2013). The nation also prides of having a high level of sophistication in its business and financial sector. The nation has highly acclaimed research institutions, which have made the nation to attain the top innovator position. The productivity of the business sector is supported by the substantial on-the-job training opportunities available for the nations available labor force CITATION Tar16 \l 1033 (TargetJobs, 2016). As such, the labor personnel in the nation can proactively adapt to emerging technologies that further support the efficiency of trading functions in the nation.

In addition, Switzerland is characterized by corrupt free organizations efficient governance structures, strong rule of law and highly accountable public sector CITATION Swi15 \l 1033 (Anon., 2015). Also, the nation has good monetary lending institutions for acquiring startup capital and emergent entrepreneurs are aggressive in venturing into the global market CITATION Ale16 \l 1033 (Balducci, 2016). In addition, the nations market is less competitive and also characterized by low levels of risks for startups. Also, domestic as well as foreign investors are treated equally by the nations laws and banks have remained well capitalized and highly competitive.

Switzerlands Weaknesses as Per The GEI Report

Despite the continued excellent performance of Switzerland, there are weaknesses that been ascertained as primary contributing factors inhibiting the full optimal economic performance of the nation. Nevertheless, the primary weakness evidenced in the nations economy is the existence of an expansive banking sector that creates a contingent liability to the Swiss government. This is because the banking system in the nation has assets valued at 469 percent of the nations Gross Domestic Product (GDP) CITATION Mar14 \l 1033 (Weernink, 2014).

Also the largest banks in the nation accounts for approximately 49 percent of the total value of assets owned by the nation CITATION Mar14 \l 1033 (Weernink, 2014). This phenomenon has occurred because the nations domestic loan books are mainly made up of residential mortgages. As such, in the event of a downturn in the economic performance of the nations real estate market, the banks that also safeguard the nations economy would be affected. Consequently, in such a case, the total economy of the Swiss government would also be adversely affected.

Individual and Institutional Profiles

According to the GEI 2015 and GEI 2016 rankings, the Swiss economy has continued to improve due to various factors that strengthens the nations economic development. Such include the high levels of institutional flexibility as well as strengths enforced by the effective governance of the nation CITATION Mic161 \l 1033 (Braun, n.d.). Such institutional strengths are inclusive of the protection policies for property rights as well as a remarkably low tolerance for acts of corruption. The nation is also safeguarded by a judiciary corruption free institutions that ensures that all national contracts are awarded equitably CITATION The141 \l 1033 (The Local CH, 2014). The nation has also manifested openness to the international trade and this has made it to become one of the global most competitive and innovative economies.

Due to the efficient regulatory framework that has been firmly institutionalized by the Swiss government, the economic resilience in the nation has retained a steady growth rate CITATION Her16 \l 1033 (Heritage, 2016). The positive growth has also been supported a remarkably vibrant entrepreneurial sector. The economy has also been supported by monetary stability, competitive monetary financing sector, availability of various financing options as well as the existence of efficient labor markets. In addition, the rich individual profiles evidenced in the nation can be supported by the aggressive entrepreneurial entrants in the investment market CITATION Ven16 \l 1033 (VentureLab, 2016). Their success can be accredited to the strength of monetary lending institutions that offer startup capital to startups at competitive interest rates and with abundant payback period.

Comparison of Switzerlands Performance to Sweden, Denmark and Canada

According to the GEI Report 2015, Switzerlands performance in comparison to Sweden, Denmark, and Canada ranks the highest. Nevertheless, the three nations performance follows in series the performance of Switzerland. This illustrates that their economic performance is also vibrant. Nevertheless, there are various factors that could supported Switzerland to perform better in comparison to the other three nations. Such include the presence of a massive pool of innovative entrepreneurs, absolutely corrupt-free institutions, strong banking system and the presence of a less competitive market for Swiss startup entrepreneurs.

Conclusion

In conclusion, Switzerland has retained its excellent economic performance over the years as supported by the GEI annual reports. The nations excellent performance can be accredited to various positive factors such as good governance, corrupt-free institutional environment, high level of innovation, highly skilled labor force and strong judiciary systems among others. Nevertheless, the full performance of the nations economy is at risk because the majority of the nations wealth is safeguarded by the real estate sector. As such, in the event of a downfall in the nations real estate sector, the gross economy of the nation would be affected.

References List:

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Balducci, A., 2016. The allure of emerging markets for swiss startups. [Online] Available at: http://www.seedstarsworld.com/blog/2016/10/allure-emerging-markets-swiss-startups/[Accessed 31 December 2016].

Braun, M., n.d. Private Sector Interaction in the Decision Making Processes of Public Research Policies: Country Profile: Switzerland. pp. 1-11.

FinTech, 2016. Top 30 FinTech Startups in Switzerland. [Online] Available at: http://fintechnews.ch/top-30-fintech-startups-in-switzerland-2/[Accessed 31 December 2016].

Heritage, 2016. 2016 Index of Economic Freedom: Switzerland. [Online] Available at: http://www.heritage.org/index/country/switzerland[Accessed 31 December 2016].

Kyora, S., 2016. Switzerland among the ten best start-up nations. [Online] Available at: http://www.startupticker.ch/en/news/january-2016/switzerland-among-the-ten-best-start-up-nations[Accessed 31 December 2016].

S-Ge, 2015. Switzerlands market is also characterized with the existence of highly qualified labor force. [Online] [Accessed 31 December 2016].

Sidler, D., 2016. Stop looking for the billion dollars Swiss startup!. [Online] Available at: https://www.investiere.ch/post/2016/05/11/stop-looking-billion-dollar-swiss-startup[Accessed 3 December 2016].

Startup Ticker, 2013. Strengths and weaknesses of the Swiss economy. [Online] Available at: http://www.startupticker.ch/en/news/september-2013/strength-and-weaknesses-of-the-swiss-economy[Accessed 31 December 2016].

Switzerland Innovation, 2016. Connecting Great Minds. [Online] Available at: https://www.switzerland-innovation.com/home[Accessed 31 December 2016].

TargetJobs, 2016. Working in Switzerland. [Online] Available at: https://targetjobs.co.uk/careers-advice/working-abroad/328879-working-in-switzerland[Accessed 31 December 2016].

The Local CH, 2014. Swiss remain among world's 'least corrupt'. [Online] Available at: http://www.thelocal.ch/20141203/switzerland-among-worlds-least-corrupt-countries-report[Accessed 31 December 2016].

Trading Economics, 2016. Switzerland Interest Rate 2000-2016. [Online] Available at: http://www.tradingeconomics.com/switzerland/interest-rate[Accessed 31 December 2016].

VentureLab, 2016. 20 Swiss-based entrepreneurs selected for 2014 Swiss National Startup Team. [Online] Available at: http://www.ventu...

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