Latin American Entrepreneurs - World Bank Group

1 World bank Latin American AND CARIBBEAN STUDIESL atin American EntrepreneursMany Firms but Little InnovationDaniel Lederman, Juli n Messina, Samuel Pienknagura, and Jamele 211/21/13 5:30 PMLatin American EntrepreneursMany Firms but Little 111/21/13 5:30 211/21/13 5:30 PMLatin American EntrepreneursMany Firms but Little InnovationDaniel Lederman, Juli n Messina, Samuel Pienknagura, and Jamele Rigolini 311/21/13 5:30 PM 2014 International bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: rights reservedThis work is a product of the staff of The World bank with external contributions. Note that The World bank does not necessarily own each component of the content included in the work. The World bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties.

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4 XiAcknowledgments ..xiiiAbbreviations ..xv1. Overview ..1 Entrepreneurship is a driver of development ..1 Entrepreneurship is vibrant but growth is weak ..4 The region has many Entrepreneurs but little innovation ..7 Few companies enter export markets ..10 Even large multinational corporations in the region are insufficiently innovative ..13 How can policy enable innovative Entrepreneurs ? ..16 Structure of the report ..20 Notes ..20 References ..212. Entrepreneurship, Entry, and the Life Cycle of Firms in Latin America and the Caribbean: Are All Forms of Firm Creation Entrepreneurial? ..23 Low- level Entrepreneurs , high- level Entrepreneurs , and employees ..24 Theoretical framework ..26 Business creation in Latin America and the Caribbean ..38 Beyond entry: Firm dynamics in Latin America and the Caribbean ..42 What is hindering high- growth entrepreneurship: Culture, institutions, or the environment?

5 49 Notes ..54 References ..563. Entrepreneurship by Incumbent Firms: What Explains the innovation Gap? ..61 What drives innovation ? A conceptual framework ..63 How innovative are firms in Latin America and the Caribbean? ..67 What explains the innovation gap? ..73 Notes ..89 References .. 511/21/13 5:30 PMvi Contents 4. Export Entrepreneurship ..95 Exporting as a transformative entrepreneurial act ..96 Contribution of export entrepreneurship in the medium term ..98 Descriptive benchmarking of export entrepreneurship ..102 Econometric benchmarking of export entrepreneurship ..112 Export promotion policies ..116 Concluding remarks ..117 Notes ..118 References ..1195. Foreign Direct Investment, Multinational Corporations, and innovation ..121 Foreign multinational corporations in Latin America and the Caribbean ..123 Multilatinas.

6 131 Concluding remarks ..136 Notes ..136 References ..1386. Toward an Enabling Environment for Innovative Entrepreneurs ..141 What are the elements of an enabling environment for innovative Entrepreneurs ? ..142 What explains the region s innovation gap? The leading suspects ..149 Notes ..150 References .. Main databases used in the study .. Do training programs for Entrepreneurs work? .. Comparing firm size across age cohorts in Colombia using Enterprise Surveys and administrative data .. Importing Entrepreneurs : Start- Up Chile .. Risk, laws, macroeconomics, and the innovation gap in Latin America and the Caribbean .. Management matters: How better practices could increase productivity in Latin America and the Caribbean .. Do s and don ts of entrepreneurship ecosystems .. Can a whale in a swimming pool create a splash? Intel and the upgrading of tertiary education in Costa Rica.

7 Type of employment, by GDP per capita .. innovation edge of medium and large firms over small firms in Latin America and the Caribbean, 2010 .. Relationship between type of employment and GDP per capita, 2010 .. Firm dynamics: entry, age, and size .. Employment growth in Colombia, by firm size and age .. Percentage of firms in selected countries introducing a new product, 2006 10 .. Investment in research and development (R&D) in selected country groups, 2008 10 .. Number of patents per capita granted by Patent and Trademark Office, actual and benchmarked, by inventor s country or place of residence .. Management practices in selected economies .. Average entry and one- year survival rates in selected countries (differences with respect to baseline) .. Sources of export growth in selected countries, 2005 07 and 2008 09 .. 611/21/13 5:30 PM Contents innovation edge of foreign multinational corporations over local firms in Latin America and the Caribbean.

8 Predicted productivity gains from entry of new multinational corporations in selected country groups, countries, and economies .. Spending on research and development (R&D) in Latin America and the Caribbean .. Sectoral position of foreign subsidiaries relative to headquarters in selected country groups, countries, and economies, 2010 11 .. Actual and benchmarked index of competition in 17 nontradable industries in selected countries or economies .. Income and engineering density in selected economies, 1900 .. Number of engineers per million people in selected countries .. Actual and benchmarked index of intellectual property rights in selected countries or economies, 2005 .. Model of entrepreneurship .. Occupational choice and GDP per capita, 2010 .. Income distribution in Latin America and the Caribbean by type of occupation, circa 2011.

9 Rate of formal business ownership in selected country groups, countries, and economies, 2011 .. Share of firms with no employees in selected country groups, countries, and economies, 2011 .. Distribution of firm size in selected country groups, countries, and economies, 2011 .. Push versus pull entrepreneurship in selected country groups, countries, and economies, 2011 .. New firm entry rates and GDP per capita in selected countries, 2004 11 .. Time required to start a business in selected country groups, countries, and economies, 2004 and 2013 .. Relationship between business formality and barriers to entry in selected countries, various years .. Employment growth in Colombia, by firm size and age cohort .. Net employment growth rates by firms in Colombia, by establishment age and size, 1994 2009 .. Employment in establishments in Colombia, by age of establishment.

10 Firm size in Latin America and the Caribbean, by age of firm, 2006 10 .. Age distribution of top 100 firms in selected country groups .. Share of business establishments in Argentina owned by foreigners, 1910 .. Entrepreneurship among immigrants and natives in the United States, by type of business and country .. Marginal effects of years in United States on entrepreneurship gap between migrant and nonmigrant white men, by cohort of arrival and region .. Extensive and intensive margins of innovation .. Percentage of firms in selected countries that introduced a new product in the past year .. Average investment in research and development, by region and level of GDP, 2008 10 .. Number of patents per capita granted by Patent and Trademark Office, actual and benchmarked, by inventor s country or place of residence .. Correlation between management quality and productivity in selected countries and economies.