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Global Entrepreneurship Monitor (GEM)

The Scenario
What government policies and initiatives are most likely to generate high levels of
entrepreneurial activity? Which are positively correlated with the economic well-being
of a country as measured by growth in GDP and job formation? Project directors of the
Global Entrepreneurship Monitor (GEM), who define entrepreneurship as “any attempt
at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team of individuals,
or an established business,” suggest the following:
• Promoting entrepreneurship, especially outside the most active age group (25–
44), with specific programs that support entrepreneurial activity.
• Facilitating the availability of resources to women to participate in the entrepreneurial process.
• Committing to long-term, substantial postsecondary education, including
training programs designed to develop skills required to start a business.
• Emphasis on developing an individual’s capacity to recognize and pursue new
• Developing the capacity of a society to accommodate the higher levels of
income disparity associated with entrepreneurial activity.
• Creating a culture that validates and promotes entrepreneurship throughout
Researchers at the Kauffman Center for Entrepreneurial Leadership (Babson College)
and the London Business School revealed these propositions based on a study
designed to prove a causal relationship between factors that affect entrepreneurial
opportunities and potential, to business dynamics and national economic growth and

Sample Solution

apitalism has implications far beyond economic aspects. Countries or governments with communist economic systems have experienced more political uprisings and revolutions than countries with capitalist economies. The Cold War provides proof of how countries with capitalist economies prevail above communist economies. Hong Kong demonstrates how economic freedom leads to happier people, and happy people typically don’t attempt to overthrow government systems. Capitalism is an effective method of avoiding governmental failure. The United States of America is an example of a capitalist, democratic, and relatively equal country in the world. If it’s compared directly to the Soviet Union, the United States is a progressive powerhouse. There are more equal opportunities for all different kinds of people. Even though not everyone ends up with the same socio-economic situation, people at least have a chance of achieving their goals if they work hard enough in a capitalist society. People in the Soviet Union were angry because they were impoverished, even though they believed they would be looked after by the government. United States President Ronald Reagan called for changes to be made with the Soviet Union, “We’ve stressed that an essential element in improving relations between the United States and the Soviet Union is human rights and Soviet compliance with international covenants on human rights” (1988). Once Mikhail Gorbachev came to power, he began to implement reforms in order to improve the Soviet economy. Despite these efforts, they ultimately led to the collapse of the Soviet Union. The desire for economic reform surfaced from the growing economic inequality within the Soviet Union. Wealth became focused within the elite, while the majority of Soviets were suffering; the standard of living in the Soviet Union was one third of the standard of living level in America and less than half of West Germany and France (Johnson & Raynes, 1984, page ii). Low standards of living generally guarantees unrest with populations because people are likely unsatisfied with their economic situation. The downfall of the Soviet Union is evidence of the fact that governments are unstable when their preferred system of economics is not capitalism.

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