Dr. Jorge Vinicio Murillo specializes in the areas of Entrepreneurship and Strategy. His research focuses on the development of entrepreneurial ecosystems, the acquisition of resources in the early stages of companies and corporate entrepreneurship.
Youth Entrepreneurship in Latin America
15 2017 March
(Jorge Vinicio Murillo Rojas)
Entrepreneurship plays a very important role in economic development and job creation in Latin American countries. According to the Global Entrepreneurship Monitor (GEM), the overall early stage entrepreneurship (TEA) rate for the Region was 17.6% in 2014 and in general terms, 36% of new entrepreneurs are under 34 years of age . According to GEM data, Latin American young people have a great entrepreneurial spirit, being one of the regions of the world in which young people have the greatest entrepreneurial intentions.
In the Region, the TEA for the youth population was 19% in 2014, which is higher than in other regions of the world and only surpassed by Sub-Saharan Africa. However, despite this dynamic activity, the GEM points out that among young Latin Americans, only 5% manage to maintain their businesses for more than 42 months. This survival rate is significantly lower than the survival rate of new businesses started by adults, which calls for reflecting on the need for initiatives and programs that strengthen youth entrepreneurship, not only in the initial stage, but also in subsequent ones (consolidation and Exit).
The profile of the Latin American youth entrepreneur is quite particular. According to research by the Youth Business International Organization, 68% of them are motivated to do business by opportunity and only 32% are motivated by need. Almost 70% of them have completed secondary education or post-secondary studies. The source of financing for these young entrepreneurs is mainly from personal savings (52%) and from banks and other financial institutions (26%). This reflects limited development of other financing mechanisms for entrepreneurship. Additionally, these young people develop new businesses in the consumer-oriented services sector (63%), such as retail, hotels and restaurants. Finally, 47% of them are in the upper third of the population's income distribution.
The environmental conditions in which young entrepreneurs develop and see their businesses grow are not completely favorable. Different obstacles prevent greater entrepreneurial development in the region, among which the lack of financial support, weaknesses in terms of education and training, some limitations in the development and transfer of Research and Development (R&D), and the need to further strengthen government policies aimed at strengthening entrepreneurship.
With the aim of promoting youth entrepreneurship, both the public and private sectors and other civil society organizations have promoted different initiatives for the development of capacities in young people, such as accompaniment by experienced entrepreneurs, financing facilitation , access to education and training, access to technological tools and development of public policies and programs to support entrepreneurship. There is still much more to do, and these efforts developed so far have been insufficient to fully promote the entrepreneurial ecosystem of the Region, so it is necessary to generate new strategies that benefit youth entrepreneurship.
It requires even greater coordination of the different efforts made and a greater diversity of initiatives and actions. Public policies related to these programs have only just begun to have some kind of effect in the entrepreneurial context of the Region and it is expected that in the coming years their impact will be greater for the good of Latin American youth entrepreneurship and society in general. In addition, given the entrepreneurial impulse among young people and their tendency to continue growing, it is extremely important to have entrepreneurship policies specifically aimed at them.