While more Brazilians than ever are starting up new businesses, on the other side of the globe in Malaysia, the number of start-ups has hit rock bottom, shows a new survey. The south-east Asian country's fall may say something about entrepreneurship.
The 2015 Global Entrepreneurship Monitor (Gem) survey released last week shows that the number of people starting new businesses climbed in a number of emerging economies last year (see Graph 1) including in South Africa, where it rose from 7% to 9.2%.
The 2015 report represents the 17th year that Gem has tracked entrepreneurship across various countries. The latest report surveyed 60 economies (down from 73 last year).
In Brazil the number of adults involved in early-stage entrepreneurial activity (including in firms of less than three and a half years old) reached an all-time high under Gem statistics, with 21% involved in starting new businesses.
In addition the country's established business rate (the percentage of adults involved in firms of three-and-a-half years and more) also continues to climb. It stands at 18,9% (see Graph 2). It comes despite the deep economic crisis that began in Brazil in 2014.
But among emerging economies Malaysia's slide in the number of adults involved in starting new firms, is probably the most worrying of all emerging economies (other than the distinct decline in adults involved in established firms in Colombia, see below).
The decline is even more puzzling, because the country is ranked by Gem experts as one of the most favourable entrepreneurial ecosystems among emerging market economies. It is also ranked high on the World Bank's Doing Business rankings (at 18th spot) and on the World Economic Forum's competitiveness index (also at 18th spot).
While like other emerging market economies it has also seen its currency (the ringgit) decline in recent months, the economy still grew at a good tick last year (5.4%), far better more than many of its emerging peers.
Fostering a culture of entrepreneurship then is essential – as is fostering a rights-based society based on freedom of expression.
Malaysia may not be a dictatorship, but politically it is only partly free. It has no free press. Corruption appears to be growing (evident by the country's recent fall in Transparency's International's Corruption Perception Index).
In addition mistrust between the races still lingers, as the government continues with race-based programmes years after independence (see this earlier blog).
Ultimately entrepreneurship requires not just things like good infrastructure and human resources and a growing market - but freedom and creativity to allow entrepreneurs to flourish. If you stifle these, you’re likely to stifle free enterprise.
Timm is a South African who writes on small business. He visited Malaysia in 2012 to study SME policies there. Follow him on Twitter at @Smallbinsight.
Stephen Timm is a