Features of Business Demography Statistics in European Countries: Relation of Enterprise Deaths and Births to GDP per Capita and Unemployment

Berislav Zmuk,Anita Harmina,Ksenija Dumicic

doi:10.7906/indecs.18.2.4

Abstract

The aim of this study is to analyse the variations and changes in business demography and macroeconomic features for 28 European countries in 2012 and 29 European countries in 2016 as well as the relations among these features based on the variables: enterprises birth rates, enterprises death rates, the level of GDP per capita and the unemployment rate. Using the hierarchical cluster analysis approach, the second aim of this research is to form and to compare the clusters of European countries with similar characteristics according to these variables for both years. The descriptive statistics results show that a relatively high heterogeneity of European countries relative to the observed variables was present in both years, but the change in variables averages suggests an overall improvement of economic and business demography features in 2016. The correlation analysis revealed that the death rate of enterprises had a statistically significant negative correlation with GDP per capita in both years and a significant positive correlation with the unemployment rate and with the birth rate of enterprises only in 2012. The hierarchical cluster analysis resulted in seven clusters in each observed year. The comparison of clustering solutions for 2012 and 2016 detected the European countries for which the movement between clusters could be seen as a deterioration and those for which it can be seen as an improvement in some or in all of the observed variables. These results have important implications for public policies aimed at reducing death of enterprises and unemployment.

Highlights

There is no doubt that new business creation is important for an economy
The analysis of the relationships between the variables revealed that the European countries on a lower level of development tend to have higher death rates of enterprises and higher unemployment rates, and that this statistically significant correlation was present in both years
In this study the descriptive statistics methods and the hierarchical cluster analysis approach were used to explore the features of European countries regarding the business demography activities based on the data on the total number of active enterprises, enterprises birth rates and enterprises death rates and regarding the chosen macroeconomic indicators based on the level of economic development and the unemployment rate

Summary

Introduction

There is no doubt that new business creation is important for an economy. The business enterprise population for the 28 European Union countries in 2016 consisted of almost 27 million active enterprises, which employed about 150 million people. The share of newly born enterprises increased by 3,5 % in 2016 in comparison to 2015 and resulted in the total of 2,6 million enterprises births in 2016, which generated about 4,0 million jobs [1]. Understanding the specific circumstances that affect the scale and the determinants of business demography is very important for development of policies that enhance entrepreneurship and increase the level of employment – one of the main priorities of the European Union 2020 growth strategy [2]. The business dynamics related policies and institutions may be a very important driving force for information and communication technology (ICT) related sectors especially since more significant cross-country differences in enterprise birth and death rates are present in younger than in mature ICT sectors [3]. According to the research conducted by [4], which examined the impact of business policies and laws on birth rates of enterprises across countries, the policies which restrain large enterprises competitiveness encourage more new enterprises births

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Discussion

Conclusion