Korea’s weak on start-ups: survey

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Korea’s weak on start-ups: survey

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Korea is behind Latvia and Colombia when it comes to entrepreneurship, according to report from a local research institute.

The report released Sunday by the Korea Economic Research Institute (KERI) said that Korea was ranked 32nd out of 120 countries in entrepreneurship last year.

The study was an analysis based on the Global Entrepreneurship Index 2015, which was compiled by the international non-profit Global Entrepreneurship and Development Institute.

Each of the 120 countries got scores based on 15 sub-indexes that assess both start-ups and how their society embraces them. They include start-ups’ business skills and networking abilities and each society’s cultural openness to accepting failures and risks.

In 32nd place, Korea was classified in the third of eight classes, on the same level as Romania and Bulgaria but lower than Latvia and Colombia, when it comes to social understanding and support of entrepreneurship.

Korea was ranked 26th out of 79 countries in 2012 and 37th out of 118 in 2013.

KERI analysts expressed concerns that the nation’s level of entrepreneurship is small compared to its economy’s size, and hasn’t shown improvement.

“This is not a good sign because the study showed Korea has a relatively low entrepreneurship level compared to the size of its gross domestic product,” said Huh Won-jea, chief researcher at KERI.

Korea was the world’s 13th largest economy last year with a $1.45 trillion GDP. That is a lot larger than Romania, which had the world’s 52nd largest GDP and Bulgaria, the 77th largest.

Latvia and Colombia have much smaller economies than Korea. Latvia’s GDP was $32.8 billion last year and Colombia’s was $40 billion.

Huh pointed out that the Korean perception of entrepreneurship hasn’t improved over past few years.

“Korea belonged to the same class three in 2013 and 2014. But some countries show drastic enhancement. Colombia in 2013 was ranked in class four, but suddenly jumped up to class two last year,” said Huh.

The KERI report compared Korea’s scores to the world’s leading start-up nations, the United States, United Kingdom, Israel and Germany. With the United States ranked at No. 1, all four countries were placed above No. 20.

Korea fell behind in five aspects: opportunities to start individual businesses, a business environment that allows free competition, a supportive culture for entrepreneurs and the possibility of individual businesses going global.

The analysts said Korea needs improvements in opportunities to start individual businesses and business environment of free competition. The country got 0.26 points and 0.23 points in those categories respectively, a lot lower than the four countries’ average.

“Korea needs to promote entrepreneurship by easing regulations for small businesses and by lowering entry barriers for them,” said Yoon Sang-ho, chief researcher at the institute.

BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]

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