BRIC Countries Witness 40 Times Faster Increase In Startup Business
Fremont: The BRIC countries are witnessing the increase in business startups over 40 times faster than other nations. This is revealed by a study conducted by UHY, the international accounting and consultancy network. The study also reveals that the BRIC countries have double digit growth, while many G8 countries are creating fewer businesses now than five years ago.
BRIC is a group of acronyms that refers to the countries of Brazil, Russia, India and China. On an average, BRIC nations are creating 18 percent new businesses per annum compared to non-BRIC nations, which are on an average creating just 0.4 percent more new businesses per annum.
The policy makers have been taking measures to encourage greater entrepreneurial activity during the financial crisis, but some countries need to do more to help new business startups, which in many countries are struggling with low demand and restricted access to bank finance.
While in some countries the number of new businesses being created has increased by double digits over the last five years, in others the number of new business startups has decreased by a double digit percentage. The country with the fastest increase is Russia, which has seen a 25.6 percent increase in the rate at which new businesses are being created over the last five years. Nearly 3.2 million new businesses were registered in Russia in 2010, compared to 1.3 million in 2006.
Spain has seen the biggest slowdown in the rate of new business creation. The annual growth rate over the last five years is minus 14.6 percent. While 2010 saw 76,622 new companies being created, 2006 witnessed over 143,859 new companies.
However, over the past year, the gap between the BRIC and non-BRIC nations has narrowed. The increase in new business startups in 2010 was on an average 3.3 percent for non-BRIC nations compared to 18 percent for the BRIC countries.
John Wolfgang, Chairman, UHY, said, “The difference in the rate at which new startups are being created is quite staggering, with the number of new incorporations decreasing for about half of the countries in our study”.
Small businesses are often considered the engine of growth and employment and therefore critical to economic prosperity. Many governments are under pressure to increase tax revenues to reduce public deficits. Unlike large multinationals, which can shift economic activity to low tax jurisdictions, the tax burden falls disproportionately on small businesses.