Ireland is ranked the second most entrepreneurial state in the European Union, with 2,000 new businesses starting up each month. However, in each of the past four years, there has been a slowdown in the rate of entrepreneurial activity, according to the results of a new global survey.
The Irish report of the Global Entrepreneurship Monitor (GEM)found that about 193,000 people in the Republic are planning to set up a business or have set up a firm within the past 42 months.
More than 100,000 new jobs were created in the Republic during 2004 as a result of entrepreneurial activity. This figure includes people who became self-employed.
There was a small increase in the amount of women involved in early stage entrepreneurial activity. Women's participation among entrepreneurs increased to 5 per cent in 2004, from 3.7 per cent in 2003, the report shows.
It also estimates that informal investment activity in the Republic over the last three years amounted to at least €1 billion. In addition, entrepreneurs have invested at least the same amount in their new businesses.
Ireland is ranked second to Poland among the 16 EU member states that participated in the major survey. However, there remains a gap in the level of activity between Europe and high-income countries such as the US, Canada and Australia.
The survey gives Ireland a total entrepreneurial activity (TEA) score of 7.7 for 2004. This compared with a score of 8.1 in 2003 and 12.2 in 2001. TEA ratings are based on the amount of people planning to become entrepreneurs and taking specific actions to bring this about, and the amount of people that set up firms in the previous 42 months.
The survey says that this fall in Irish entrepreneurial activity reflects a small percentage decline in new business owners, but is primarily associated with a decline in the number of people planning to start a new business.
It also highlights that the percentage of the population that is considering becoming an entrepreneur in the next three years is lower than in many EU states.
It concludes that this is a worrying trend and predicts that Ireland will need to maintain, if not increase, the number of entrepreneurs, particularly within business services to support growth.
In the business services category, Ireland lags behind other high-income countries in the level of entrepreneurial activity.
The survey pinpoints a lack of a specific and co-ordinated Government policy focusing on entrepreneurial activity and an inadequate response from the education sector, as weaknesses. It also highlights a skills gap in the workforce, a lack of infrastructure and difficulties in accessing finance as inhibitors for entrepreneurs.
However, it found the Republic has positive features to promote entrepreneurial activity such as a young population, a buoyant economy and a generally positive view of entrepreneurship among the population.
The report recommends that the Government should develop a new national policy to support entrepreneurial activity.
