Entrepreneurship is a critical part of the process of economic development and growth and important for the continued dynamism of the modern economy. However, there is sparse data on the actual rate of new firm creation. In addition, little is known about the business environments that promote new firm creation and entrepreneurial potential. Furthermore, previous studies do not address the effect of new entrants on the performance and efficiency of incumbent firms. These questions are of important concern for policymakers, who in country after country are trying to implement policies that will foster entrepreneurship. Our studies address these questions by documenting entry rates across countries and industries; identifying country, firm and owner characteristics related to greater entrepreneurship; and studying the effect of entrepreneurship on industry performance. The 2007 World Bank Group Entrepreneurship Survey
A new cross-country, time-series data set collects cross-country data on the number of total and newly registered firms. The data shows a strong correlation between entrepreneurship and the quality of the legal and regulatory environment, ease of access to finance, and prevalence of informality.  Measuring entrepreneurship guides effective policymaking and delivers new capabilities for identifying the impact of reforms. Many interventions are introduced to support private sector development, such as by facilitating entrepreneurship or reducing the barriers to starting a business, and the data set provides a tool for monitoring and evaluating these efforts. It makes it possible, for example, to measure how reforms in the business environment affect the growth of the formal sector and how political, macroeconomic, and other shocks affect the entry and exit of private firms. Data sources and methodology Barriers to Entrepreneurship
 Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing firm creation (“entry regulations”) and on financial development. We find entry regulations hamper the creation of new firms, especially in industries that naturally should have high entry. Also, value added per employee in naturally “high entry” industries grows more slowly in countries with onerous regulations on entry. The consequences of regulatory barriers against entrepreneurship are seen, not in young firms, but in older firms, who grow more slowly and to a smaller size. Thus the absence of the disciplining effect of competition from new firms has real adverse effects. Interestingly, regulatory entry barriers have no adverse effect on entrepreneurship in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations, when effectively implemented, are neither benign nor welfare improving. Turning to financial development, we find that both the availability of private (bank) credit and of trade credit does aid entry in financially dependent industries. Thus unlike entry regulations, regulations that improve access to finance can aid entrepreneurship. Conference To better understand the factors that encourage entrepreneurship, the World Bank Group and the Kauffman Foundation are jointly offering funding of up to US$35,000 for research projects that will study what contributes to greater entrepreneurship and formal sector participation, and the impact of related policy reforms. We are particularly interested in “experimental” field work to study the impact of policy reforms on firm entry, performance, and survival. The experimental designs can range from collecting and analyzing detailed data before and after a government reform, to simulating a particular reform with targeted or randomized interventions. For more information see: { Call for papers}
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