The best countries for entrepreneurs do not necessarily have the biggest economies. In fact, based on a new report by the Organization for Economic Co-operation and Development, four of the 10 best countries for entrepreneurship have among the smallest economies in the developed world. While it is no surprise that the United States and the United Kingdom are among the best countries for entrepreneurs, most businesses would not put Portugal or New Zealand among them.
In order to determine the best countries for starting a business, the OECD took into account the time it takes to start a business, the number of procedures necessary to start a business, the cost of following through with those procedures compared to national income per capita, and the minimum paid-in capital necessary as a percentage of income per capita. Based on this data, 24/7 Wall St. identified the 10 countries where it is easiest to start a business.
According to OECD chief media officer Matthias Rumpf, the restrictions examined in this report can be a deterrent to starting a business: “if you have to spend all the time to cope with red tape, you can’t spend that time to work on your business plan, to ship your products, and to reach out to clients.”
Just because it is easy to start up a business does not mean that small businesses are being started or that they comprise a large part of the economy. While New Zealand is one of best countries to start a small business, it ranks 21 out of 29 countries (where data was available) in the percentage of people working for small businesses. Meanwhile, the country ranks third in the percentage of people who work for large companies.
24/7 Wall St. also looked at the countries’ total gross domestic product and GDP per capita, anticipating a correlation between the ease of starting a small business and the strength of the economy. However, no relationship was apparent. While several of the best countries for entrepreneurs are among the largest countries in the world, such as the U.S. and France, smaller economies such as Chile and New Zealand also made the top 10.
The OECD also looked at the perception of entrepreneurship among citizens, including perceived opportunities to starting a business, the percentage that believe they have the skills to start a business, those who believe the fear of failure would prevent them from attempting to start a new venture and the high status of successful entrepreneurs.
Based on the OECD report, perception does not necessarily produce good opportunities. For example, while Switzerland has the eighth-worst score for starting a new business, residents had the seventh-highest perception about opportunities. Meanwhile, South Korea is the seventh-easiest country to start a small business, but only ranked 25th in perception out of 34.
These are the 10 countries that are best for entrepreneurs.