Publicly funded programmes

• Publicly funded programmes and consultancy services need to be more

widely advertised. It is believed that there is a general lack of awareness of programmes (in general, rather than particular) amongst entrepre- neurs.

• Programmes should adopt a wider focus. This is particularly concerned

with the Technology Incubators where the current emphasis on Infor- mation Technology and Biotechnology firms is seen as a barrier to the development of other innovative areas of business.

Appendix A

Venture Capital Notes

1. Domestic investments

• For all countries, we have data for investments by domestic venture

capital firms in domestic companies (some countries' data sets are more complete than others).

• For European countries, a domestic investment is determined by the

local office structure of the venture capital firm. If a firm has a local office in the country where the investee company is located, the invest- ment is counted in that country's statistics.

• If a venture capital firm does not have a local office in a country

where its investee company is located, the investment is not recorded in that country's statistics. Rather, it is recorded as an investment out- side the country where the venture capital firm is located.

2. Investments (Disbursements) outside the country

• These are investments in companies outside the country where the

fund that made the investment is located.

• We do not have data on investments outside the country for all na-

tions. We have them for every European country and Canada and Singapore.

• For Australia, Canada, and Singapore, to keep the spreadsheet as

uncomplicated as feasible, investments outside the country are in the “Non-European” column. (Even though some of the investments were in Europe).

3. Industry

• There are differences among countries in the classification of indu-

stries. The European countries all use the same industry classification scheme. Other countries use different classification schemes. For example, the USA has 10 industry categories, European countries have 17, Canada has 11, Singapore has 7.

• Valid comparisons of investments within industry segments can made

as follows: Comparisons among European countries reporting data for any industry segment. Comparison among all countries (Europe an and Non-European) reporting data for the following segments: Computer related, Communications, and Consumer.

• Comparisons among all nations (European and Non-European)

within all other industry segments are probably invalid. For example, in Europe biotechnology does not include medical pharmaceuticals,

whereas in non-European nations it does. For Australia, there is a big percentage in the "other" category because we were unable to reclas- sify some Australian industry sectors.

4. Stage

• There are differences among countries in the classification of stages. All the European countries use the same definitions. Where necessary we have reorganized the data so that it is classified under the headings shown. Where we could not reorganize the data into the headings shown, we placed all investments from seed through expansion stage companies in the expansion column (i.e. Israel).

• Valid comparisons of investments within stages can made as follows: Comparisons among all countries (European and Non-European) for seed + startup + early + expansion combined. Comparisons among European countries can be made within any one of the stages. • Comparisions among all countries (European and Non-European)

within any one stage are probably invalid. 5. Classic Venture Capital

• Classic venture capital comprises investments in seed, early, startup, and expansion stage companies. The term “classic” venture captial is used to distinguish it from “merchant” capital, which comprises acqui- sition, buyout, and replacement investments. Hence, classic venture capital, which is invested almost entirely in young, entrepreneurial companies, is the capital that is relevant for the GEM study.

6. Domestic investment

• We have used domestic investments rather than total investments for the following reasons:

(1) It is the most reliable measurement among all the countries. (2) We have no way of reliably determining direct foreign investments into companies (i.e. investments not made through a local office.) (3) We believe that domestic investment is a valid measure of the de- dication to venture capital within a country.

• By using only domestic investments, the total number of investments and the total amount invested in a country is underestimated. • For the European countries in this data set, 12% of all the companies

received their venture capital from non-domestic sources. However, we believe that the underestimate for Europe is substantially lower than 12%, perhaps as low as 5%, for companies at the seed, startup, early, and expansion stages, because, in general, a higher proportion of direct investments outside a country are in acquisitions and buyouts. • For non-European countries, we are unable to estimate the percen- tage of companies that received their venture capital from non-dome- stic sources.

• For the USA, we believe the underestimate is at most a few percent. • For Israel, the underestimate is substantially higher because it is

reported that Israeli venture capital firms accounted for only 43% of the money invested in 1999. The other 57% was invested by non- Israeli VC funds, foreign companies, Israeli and non-Israeli institutio- nal investors, and angels.

7. Commitments

• Where the intended stages for the commitments were not stated, we

used the percentage of the actual investments in each stage for 1999.

8. India

• Number of investments for India are estimated from 1998 numbers. • Commitments are computed from cumulative commitments through

1999.

9. Classic VC to IT and Consumer companies

• The method of computing this has dubious validity because it as-

sumes that the proportion of IT and consumer companies is the same across all stages. It is very likely that there are proportionately more “classic” stage IT companies compared with “merchant” stage. The situation is probably reversed for consumer companies.

10. IT investments in Japan

• All IT investments (computers, software, Internet, communications,

etc) are lumped together and listed under communications.

The venture capital data set was prepared by Bill Bygrave: email: [email protected]

Appendix B

Data Sources & Explanatory Notes

Data references 1. Growth

Source: World Economic Outlook database (April 2000), IMF (http://www.imf.org/external/pubs/ft/weo/2000/01/data/index.htm). Notes on variables:

• Real GDP growth: annual percent change. It is computed as year-on- year changes of GDP at constant prices (base year varies across coun- tries). With the exception of India, Argentina and Brazil, data from 1996 to 1999 are actual while data for 2000 and 2001 are IMF projec- tions.

• Per capita GDP (current prices, $US per person): GDP is expressed in current $US per person. Data are derived by first converting GDP in local currencies to $US and then dividing GDP by total population. 2. Employment and Labour Force

Sources: International labour organisation (ILO) (http://laborsta. ilo. org/

cgi-bin/broker.exe); OECD Employment Outlook (June 2000); OECD

Labour Force Survey (1999 Edition); National Teams (Israel, Ireland, Argentina and Brazil), and National Statistic Institutes (Singapore:

http://www.singstat.gov.sg/FACT/KEYIND/keyind.html and Argentina: http://www.indec.mecon.ar).

Notes on variables:

• Civilian Labour Force (LF): Economically active civilian population (therefore excluding armed forces). The LF is defined as the sum of employed and unemployed people.

• Civilian Employment: All persons above a specific age (which varies across countries, being normally 15 or 16 year-old) who during a specified brief period, either a week or a day, were in the following categories:

- Paid employment (including temporarily not at work due to illness or maternity, for example, but with a formal job attachment and paid apprentices)

- Self-employment (including unpaid family workers and employers, own account workers and members of co-operatives)

• Unemployed: all persons above a specified age who during a refe-

rence period were:

- Without work (in neither of the categories above) - Currently available for work

- Seeking work

3. Population

Sources: US Census Bureau International Database (http://www.cen-

sus.gov/ipc/www/idbnew.html).

Some estimations were necessary to compute the age structure of the population but the body of the database is directly taken form the Census.

4. Education

Source: World Development Indicators 2000 (World Bank), pages 74-77 Notes on variables:

• Gross enrolment ratio: it is the ratio of total enrolment regardless of

age, to the population of the age group that officially corresponds to the level of education

• Net enrolment ratio: it is the ratio of the number of children of offi-

cial school age who are enrolled in school to the population of the cor- responding official school age. Based on the International Standard Classification of Education.

5. Exports as a % of GDP

Source: World Trade Organisation Statistics (http://www.wto.org/eng-

lish/res_e/statis_e/overvw_e.htm#longterm)

Notes on Variables:

• Exports and Imports are from the World merchandise trade by region

long-term series. The GDP is from the IMF World Economic Outlook (2000).

6. Productivity change per economic sector

Sources: World Competitiveness Yearbook, several years, IMF Interna- tional Financial Statistics, July 2000 and International Labour Organisa- tion Database.

Notes on variables:

• GDP per sector: The WCY provides the breakdown of the economic

sectors (agriculture, Industry and Services) as a % of GDP. That figure was multiplied by the total GDP for the corresponding years at constant prices (1990) provided by the IMF.

• Employment per sector: The WCY provides the shares of employment in each economic sector. That figure was multiplied by the total employment for the corresponding years provided by the ILO. • The productivity was calculated as the nominal GDP per employed in

each sector. The productivity growth is the proportional change of productivity.

7. Migration

Source: United Nations, Population Division, Department for Econo- mic and Social Information and Policy Analysis: United Nations Inter-

national Migration Policies 1995 (http://www.undp.org/popin/wdtrends/ migpol95/timp.htm).

Notes on variables:

• The stock of migrants is defined as “the estimated total number of international migrants who lived in the country on 1 January 1990.” The stock is then divided by the total population.

• Percentage of women out of the stock of migrants. 8. Internet presence

Sources: NUA Internet Surveys (www.nua.ie); World Development Indi- cators 2000 (World Bank); World Competitive Yearbook 1999; Internet Software Consortium (www.isc.org).

Notes on variables:

• Percentage of population on line: Data come from NUA Internet Sur- veys. The online figures represent both adults and children who have accessed the internet at least once during the 3 months prior to being surveyed. In the case of the US, the survey company is NielsenNet Ratings who defines population on line as all members (2 years of age or older) of US households which currently have access to the Inter- net. The total number of people who have accessed the internet is then calculated as a percentage of population. Only in the case of Canada the population is restricted to the adult population (16 and over, so figures do not include children online). Some figures refer to February or March 2000. In the case of Australia, Brazil, Canada, Denmark, Finland, Israel, Korea, Spain and Sweden the data is for the end of 1999. Singapore’s most recent figure is from 1997.

• Hosts per 10000 people, July 1999: These data are from the World Development Indicators 2000 (World Bank). Internet Hosts are com- puters connected directly to the World-Wide network, each allowing many computer users to access the Internet. Hosts are assigned to countries on the basis of the host’s country code, though this does not necessarily indicate that the host is physically located in the country.

All hosts lacking a country code identification are assigned to the United States (.com, .edu etc) which might lead to some double- counting and therefore overestimation of the US figures.

• Computers per 1000 people, 1998: The source is the World Competi-

tiveness Yearbook (WCY) 1999, who quotes the Computer Industry Almanac Inc.

• Computer power, 1998: Data come also from the WCY 1999. It refers

to the share of total World-Wide MIPS (millions of instructions per second) corresponding to each country. Data given in %.

• Investment in telecommunications, 1995-1997: Average percentage of

GDP corresponding to both state-owned and private companies. The source quoted by the WCY is Siemens International Telecom Stat 1998.

9. Government presence

Sources: World Competitiveness Yearbook 1999; World development Indicators 2000; IMF Government Financial Statistics 1998 Yearbook; OECD Revenue Statistics; La Porta et al. “Law and Finance” NBER WP 5661, July 1996.

Notes on variables:

• Government employment as a % of total employment. Data are from

the World Competitiveness Yearbook 1999. The figure for Australia includes public enterprise's employment. The data is for 1996.

• Tax revenue as a % of GDP: Data come from the World Development

Indicators 2000 (World Bank), who quotes the Government Finan- cial Statistics (GFS) of the IMF. This variable is a first approximation to the level of taxation in a country. It is measured in local currency and normalised by scaling variables in the same units to easy cross- country comparisons. The data refer to Central Government revenue only, which might understate the total tax burden in decentralised countries. Data for Brazil, Canada, Denmark and Japan are missing. The most recent available year is 1998 but for some countries data refer to earlier years.

• Subsidies and other current transfers, as a % of total expenditure: It

refers to Central Government only, and comes from the WDI, who quotes once again the GFS (IMF). The latest figure refers to 1997, but for some countries earlier years are referred. Data for Japan is missing.

• Collected indirect tax revenues as a % of GDP: It refers to taxes on

goods and services. Data come from the WCY 1999 who quotes the Revenue Statistics (OECD), GFS (IMF) and national sources. It refers to General Government1_{. For the cases of USA and Israel, data refer to}

Central government only. The latest year is 1998.

1

General Government consi- sts of supra-national authori- ties, the central administra- tion and the agencies whose operations are under its effective control, state and local government and their administrations, social securi- ty schemes and autonomous government entities, exclud- ing public enterprises

• Collected capital and property taxes, as a % of GDP: Data come from the WCY 1999, with the same sources as before. It includes recurrent taxes on immovable property and on net wealth, state, inheritance and gift taxes, taxes on financial and capital transactions, and other recur- rent and non-recurrent taxes on property, paid to General Govern ment.

• Shareholders’ right index: The index describes how it is for sharehol- ders to exercise their voting rights, that is, how strongly the legal system favours shareholders (against managers) in the voting process. The source is the Company Law or Commercial Code. Goes from 0 to 5, the higher the better off the shareholders are.

• Creditors’ right index: Rights to repossess collateral and to have a say in reorganisation. The source is the Bankruptcy and Reorganisation Laws. The index goes from 0 to 4, the higher the better off the credi- tors are.

• Enforcement index: The source is the International Country Risk Guide and the variables are evaluated for the period going from 1982 to 1995. The index ranks from 0 to 10, the higher, the better laws are enforced in a country.

10. Taxation

Sources: World Competitiveness Yearbook 1999, PriceWaterhouse Coopers’ worldwide tax reports.

Notes on variables:

• Average corporate tax on profit as a % of pre-tax profits: The source is the PricewaterhouseCoopers' “Corporate taxes 98, World-wide sum- maries.” It refers to profit before tax in order to make tax rates as com- parable as possible; the model company assumed is an ordinary com- mercial company, active only in the national territory; where the rate is not flat the smaller rate is taken as the rate applicable to small com- panies.

• Employers’ social security contribution rate as a % of GDP per capita: The WCY quoted source is again the PricewaterhouseCoopers Soft- ware “Resource.” The data is for 1998.

• Highest Marginal Income rate: The data come from the WDI 2000, whose source is the PriceWaterhouseCoopers’s “Individual Taxes: Worldwide summaries 1999”. It reports the highest rate shown on the schedule of tax rates applied to the taxable income of individuals. Data is for 1999. France is missing.

GEM 2000 – Notes and Data Sources

Adult Surveys

Surveys of 2,000 adults completed in each GEM 2000 country in the summer of 2000; age standardised to 18-64 years of age for most analy- ses; all samples weighted to provide samples representative of the total national population. These weights adjusted to sum to the total number of respondents 18-64 years old.

Adult Surv (2)

Surveys of 1,000 adults completed in each GEM 1999 country in the Spring of 1999; age standardized to all those 18 and older. [Canada, Denmark, Finland, France, Germany, Israel, Italy, Japan, United King- dom, United States].

BRL

Bankruptcy and Reorganisation Laws.

CL/CC

Company Law or Commercial Code.

Expert Quest

Questionnaires completed by national experts in each country at the conclusion of a face-to-face interview completed by each national team.

GCR: 1997

Schwab, K. and J. Sachs. [1997] The Global Competitiveness Report: 1997. Geneva, Switzerland: World Economic Forum.

GCR: 1998

Schwab, K. and J. Sachs. [1998] The Global Competitiveness Report: 1998. Geneva, Switzerland: World Economic Forum.

GCR: 1999

Schwab, K., M. Porter, and J. Sachs. [1999] The Global Competitiveness Report: 1999. Geneva, Switzerland: World Economic Forum.

ICRG

International Country Risk Guide.

IMF

World Economic Outlook Data Base (April 2000), International Mone- tary Fund, “www.imf.org/external/pubs/ft/weo/2000/01/data/index. htm”. Computed on year-to-year changes of Gross Domestic Product at con-

stant prices (base year varies across countries). With exception of Argen- tina, Brazil, and India, data from 1996-1999 are actual and projections used for 2000 and 20001. Per capita GDP computed by first converting GDP to $US and then dividing by total population (all ages).

IEF: 1999

Johnson, Bryan T, K.R. Holmes, and M. Kirkpatrick. [1999] 1999 Index of Economic Freedom. Washington, D.C. and New York City, NY: Heri- tage Foundation & the Wall Street Journal.

IEF: 2000

O’Driscol, G. P., K.R. Holmes, and M. Kirkpatrick. [2000] 2000 Index of Economic Freedom. Washington, D.C. and New York City, NY: Heritage Foundation & the Wall Street Journal.

IEF99 (1)

Johnson, Bryan T, K.R. Holmes, and M. Kirkpatrick. [1999] 1999 Index of Economic Freedom. Washington, D.C. and New York City, NY: Heri- tage Foundation & the Wall Street Journal. See Pg 67 for definition, national summaries for actual values.

ILO

International Labor Organization [http://laborsta.ilo.org/cgi-bin/bro- ker.exe].

ITV (1)

NUA Internet Surveys. (www.nua.ie) OECD

Organization for Economic Co-ordination and Development [OECD] Employment Outlook (June 2000); OECD Labour Force Survey (1999 Edition); GEM National Teams providing country specific data (Argen- tina, Brazil, Ireland, and Israel), and National Statistical Institutes (Sin- gapore: http://www.singstat.gov.sg/FACT/KEYIND/keyind.html) and Argentina (http://www.indec.mecon.ar).

PROD NOTE

Sources: World Competitiveness Yearbook, several years; IMF Internati- onal financial Statistics (July2000), and International Labour Organiza- tion Data base. WCY provides details on percent of GDP by sector (Agri- culture, Industry, and Services). GDP for each year taken from IMF data using constant prices since 1990. WCY provides data on employment in each sector. Productivity was calculated annually as the GDP per sector per employed person in that sector. Productivity growth was calculated as the proportional change in productivity.

MIGRATION

United Nations, Population Division, Department for Economic and Social Information and Policy Analysis: United Nations International Migration Policies 1995 [http://www.undp.org/popin/wdtrends/ mig pol

In document Global Entrepreneurship Monitor. Danish National Executive Report 2000 (Page 89-114)