Has the decreased interest rate in USA, EU, Japan helped to create new blood in the economy? Have trademark registrations increased? Have patent registrations increased? Have small businesses increased in numbers? If not, something is very wrong about the economy...
I can't speak to the EU or Japan but I see no evidence in the U.S. that small business formation has picked up. In fact, I would argue it has probably fallen. One data point is the net business birth/death adjustment to payrolls is smaller now than it was in 2006-07. The NFIB survey suggests credit/rates are not the problem as only 3% of small businesses cite 'financial and interest rates' as the primary problem in 2012 and that only reached 4% in the height of the financial crisis. However, in 2012 20% cited 'government requirements' versus 10% in 2007. There is a lot of red tape involved in starting and running a business (I know, I started one in 2008) and low rates and easy money can't substitute for nonmonetary barriers to business formation. According to the NY Times (6/12/12) " In 1950, fewer than 5 percent of Americans worked in jobs that required licenses. Today, it’s roughly 30 percent, and that number is likely to grow." We are talking not just doctors and pilots (good) but interior designers, personal trainers, and preschool teachers. Then there are environmental regulations and (some to hit small businesses) health insurance requirements. People start small businesses for the prospect of gain not because funding costs are low. I think the political culture right now is anti-business in the U.S. and this is reflected in weaker startups and employment growth.
You pretty much confirm what I have suspected. However, without "new blood" i suspect recovery will be tough.
I tend to agree with that. ADP employment data by firm size is only available since January 2005. However, if you look at the 36-month change (essentially to the employment peak), total employment growth was 4.8 million. By firm size: 1-19 employees 1.6 mn, 1000+ employees -1.3 mn. So 1/3rd of total employment growth came from the smallest companies although this sector only accounted for 1/4 of total employment in 2005. Over last three years, only 0.6 million jobs came from 1-19 employee companies.
This can also can suggest that entering the market is tougher, despite interest rate being lower.
I failed to find some recent data regarding bankruptcy numbers, active company numbers, new companies registered by country.
I have also failed to find recent data on medium survival of newly created businesses.
True today's focus is on large companies, but new companies tend to reduce unemployment, as older companies increase productivity mostly by reducing employee's numbers.
World bank ease of doing business (IC.BUS.EASE.XQ) shows constant values in US (4), decreasing ease in EU and Japan and constant values in China but data is available only in 2011 and 2012. However if doing business is significantly better in US (4) EU (24) and Japan (40) compared to China (91) and trademark registrations are higher in China, it think consumption must be the basic reason for this discrepancy.
- Badges
- Science topic