metadata: authors: 0: author: Krylova,Yulia
1: author: Ramalho,Rita
2: author: Meunier,Frederic
count: World
docna: 0: docna: Women's entrepreneurship : how to
            measure the gap between new female and male entrepreneurs?
docty: Policy Research Working Paper
subtopic: Private Sector Economics,Technology Industry,Technology Innovation,Labor Markets,Educational Sciences,Gender and Development,Economics and Gender,Gender and Poverty,Private Sector Development Law,Marketing,Gender and Economic Policy,Gender and Economics
teratopic: Science and Technology Development,Gender,Industry,Macroeconomics and Economic Growth
abstracts: cdata!: This paper analyzes data on female and
            male entrepreneurship that were collected by the World Bank
            Group's Entrepreneurship Database. Recognizing the
            importance of a differentiated approach to entrepreneurship
            in terms of legal entities, the data on female and male
            business owners are collected at the level of limited
            liability companies and sole proprietorships. Forty-four of
            the 143 economies that participated in the Entrepreneurship
            project provided some sex-disaggregated data for 2016. The
            paper finds that the gender gap in business ownership
            remains high in many economies around the world. In the
            majority of the analyzed economies, less than one-third of
            new limited liability company owners are women. Although
            sole proprietorships are more frequently used by female
            entrepreneurs, only three economies have similar or equal
            number of women business owners relative to men. The gap in
            female entrepreneurship is especially apparent in low-income
            economies, where women are much less likely than men to
            start a new business. The paper also provides new insights
            into the relationship between female entrepreneurship and
            various institutional factors, including women's
            financial inclusion, the gender gap in education, and legal
            rights disparities. The analysis suggests a need to expand
            the collection of sex-disaggregated data, to trace the
            economies' progress in narrowing the existing gender
            gap in entrepreneurship.
repnme: repnme: Women's entrepreneurship : how to
            measure the gap between new female and male entrepreneurs?
display_title: Women's entrepreneurship : how
            to measure the gap between new female and male entrepreneurs
listing_relative_url: /research/2017/11/28156842/womens-entrepreneurship-measure-gap-between-new-female-male-entrepreneurs
topicv3: Private Sector Development m1326060 1921,Education m1327048 470,Gender m1327621 615,Female and Youth Entrepreneurship m1327623 398,Entrepreneurship m1582903 4424
publishtoextweb_dt: 2017-11-14T00:00:00Z
historic_topic: Science and Technology Development,Gender,Industry,Macroeconomics and Economic Growth
no_of_pages: 28
author_keys: 0: author_key: 1561694
1: author_key: 683601
2: author_key: 1081634
model_extractions: WPS8242 Policy Research Working Paper 8242

# Women’s Entrepreneurship

How to Measure the Gap between New Female and Male Entrepreneurs?

_Frédéric Meunier Yulia Krylova Rita Ramalho_ Development Economics Global Indicators Group November 2017
Policy Research Working Paper 8242

# **Abstract**

This paper analyzes data on female and male entrepreneurship that were collected by the World Bank Group’s Entrepreneurship Database. Recognizing the importance of a differentiated approach to entrepreneurship in terms of legal entities, the data on female and male business owners are collected at the level of limited liability companies and sole proprietorships. Forty-four of the 143 economies that participated in the Entrepreneurship project provided some sex-disaggregated data for 2016. The paper finds that the gender gap in business ownership remains high in many economies around the world. In the majority of the analyzed economies, less than one-third of new limited liability company owners are women. Although sole proprietorships are more frequently used by female entrepreneurs, only three economies have similar or equal number of women business owners relative to men. The gap in female entrepreneurship is especially apparent in low-income economies, where women are much less likely than men to start a new business. The paper also provides new insights into the relationship between female entrepreneurship and various institutional factors, including women’s financial inclusion, the gender gap in education, and legal rights disparities. The analysis suggests a need to expand the collection of sex-disaggregated data, to trace the economies’ progress in narrowing the existing gender gap in entrepreneurship.

This paper is a product of the Global Indicators Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at fmeunier@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **Women’s Entrepreneurship: How to Measure the Gap between New Female and Male Entrepreneurs?**

_Frédéric Meunier Yulia Krylova Rita Ramalho_ JEL: L26, J16 Keywords: Female entrepreneurship, business ownership, gender gap The data collection was made possible thanks to the work of Aure Demoulin, Marianne Petrosyan, Tatyana Sydorenko, Enrique Yepiz Mendivil and Han Seul Yoon. The authors are very thankful to Noa Catalina Gimelli, Anja Robakowski-Van Stralen, Santiago Croci Downes, Sarah Iqbal, Asif Mohammed Islam and Alice Ouedraogo for helpful discussions and comments. The authors are especially grateful to the Department for International Development (DFID) for providing financial support making the collection and dissemination of the sex-disaggregated data on female entrepreneurship possible.
# **1. Introduction**

Women’s economic empowerment is a cornerstone of the 2030 Agenda for Sustainable Development. The 2016 Report of the United Nations Secretary-General’s High-Level Panel on Women’s Economic Empowerment provides strong evidence that women are lagging behind men in terms of the number of female business owners, the size of women-owned businesses, and their access to economic resources. Specifically, women-owned enterprises are smaller and disadvantaged in their access to credit, resources, and assets (UN Secretary-General’s High-Level Panel on Women’s Economic Empowerment 2016, 2). With data on the existing gender gap in female entrepreneurship sparse, tracking the progress achieved by women in this area becomes more important.

Cross-country comparisons are essential for in-depth analysis of the development of female entrepreneurship in different institutional, legal and socio-cultural environments. Measuring women’s entrepreneurial activity is critically important for a better understanding of how female entrepreneurs contribute to the economy and society. However, there are few data sets related to female entrepreneurship with comparable cross-country data. To address this issue, the 2017 edition of the World Bank Group’s Entrepreneurship Database expanded its scope to collect comparable cross-country data on the number of new female and male LLC owners and sole proprietors.

The importance of female entrepreneurship for economic development is widely recognized. Numerous studies demonstrate the positive impact of female entrepreneurs on economic growth and development, as well as sustainable and durable peace (Cuberes and Teignier 2014; Fetsch, Jackson, and Wiens 2015; Lewis et al. 2014; Woetzel et al. 2015). Moreover, economies characterized by high levels of female entrepreneurial activity are more resilient to financial crises and experience economic slowdowns less frequently (Global Entrepreneurship Research Association 2017, 29). Despite different methodologies, these studies find significant socioeconomic benefits of female entrepreneurship. According to Woetzel et _— —_ al. (2015), a “full-potential” scenario in which women participate in the economy identically to men would contribute as much as $28 trillion, or 26 percent, to annual global GDP by 2025. Currently, the potential of female entrepreneurs is not fully realized in many economies. Indeed, an analysis of 15 gender indicators across 95 economies shows that 46 of these economies have very high levels of gender inequality on more than half of the indicators (ibid.). Another cross-country study demonstrates that gender gaprelated income losses differ by geographical region (Cuberes and Teignier 2014). Economies in the Middle East and North Africa have the highest income loss associated with lower economic opportunities for women (27 percent); in Europe, this loss is less than 10 percent (ibid., 21).

This study provides further evidence of gender gaps in female business entry and ownership in many economies worldwide. Indeed, less than one-third of LLC owners are women in the vast majority of economies. Although sole proprietorships are more frequently used by female entrepreneurs, only three economies have similar or equal numbers of women business owners relative to men. The study also suggests that the gap in female entrepreneurship is reinforced by other gender inequalities, such as low financial inclusion of women, the gap in education, and legal rights disparities.

Section 2 reviews the coverage and limitations of existing female entrepreneurship data sets. Section 3 presents the methodology and describes the data collection process, with a particular focus on the new gender-specific indicators. Section 4 consists of a comparative analysis of gender gaps in business entry and ownership across economies. Section 5 discusses how institutional factors can influence female entrepreneurship. Specifically, this section analyzes the link between the level of female entrepreneurship and other factors, including legal barriers for women to doing business, their level of education and their ability to access bank accounts and capital.

2
# **2. Female Entrepreneurship and Existing Data Sets**

The lack of comprehensive sex-disaggregated data on business entry and ownership presents a significant obstacle to the global and diversified analysis of female entrepreneurship. Due to insufficient standardized and country-comparable data, the diagnostics of gender gaps in entrepreneurship are limited. This section offers a brief overview of the existing data sets and indicators commonly used to measure female entrepreneurship and analyzes their limitations.

The Global Entrepreneurship Monitor (GEM) was launched in 1999 and is now carried out by more than 400 experts on entrepreneurship from over 100 research and academic institutions (Global Entrepreneurship Research Association 2017). The GEM considers the broad definition of 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” (Reynolds, Hay, and Camp 1999, 3). This definition of entrepreneurship is not limited to a specific type of legal entity. Since 2004, the Global Entrepreneurship Research Association has published biannual reports on women’s entrepreneurship which provide analysis of female entrepreneurs who intend to start and run businesses. The most recent report, for 2015, covers 83 economies. One of the key indicators used is the Total Early-Stage Entrepreneurship Activity (TEA) female and male rates which measure the percentage of the adult population either in the process of starting a business or who have recently started a business (Global Entrepreneurship Research Association 2015, 17). Methodologically, the GEM reports rely heavily on country-level surveys. For the TEA, the GEM collects data with an Adult Population Survey (APS) of at least 2,000 randomly selected adults in each economy. In addition, a National Expert Survey (NES) collects in-depth opinions from at least 36 national experts about the factors that affect the entrepreneurship environment in each economy.

In 2011, the Organisation for Economic Co-operation and Development (OECD) launched a gender initiative to strengthen gender equality in three areas: education, employment and entrepreneurship. The OECD broadly defines entrepreneurs as “people who own and work in their own business, including unincorporated businesses and own-account workers” (OECD 2016, 122). The OECD Gender Data Portal provides data on 18 indicators related to female entrepreneurship including the share of female-owned soleproprietor enterprises, earnings gap in self-employment and attitudes toward entrepreneurial risk. However, geographic coverage is limited to the 35 OECD members and partner economies. Furthermore, some indicators do not have comprehensive country coverage. The 2011–2015 data on the share of sole-proprietor enterprises owned by women, for example, are available for only one country (France).

The United Nations launched the Evidence and Data for Gender Equality (EDGE) project in 2013 to strengthen national systems on gender data collection in critical areas of policy making. As of June 2017, the list of Minimum Set of Gender Indicators contained 52 quantitative indicators and 11 qualitative indicators related to national norms. Two of the indicators measure entrepreneurial activity directly, namely the percentage of women-owned firms (defined by size) and the proportion of workers who are selfemployed. Between 2012 and 2015, EDGE focused on the development of guidelines for the collection of gender indicators based on household surveys. The EDGE pilot project was conducted in only seven _—_ developing economies Georgia, Maldives, Mexico, Mongolia, the Philippines, South Africa and Uganda. Similar to the OECD gender initiative, the EDGE project defines entrepreneurs as “persons who have direct control over an enterprise they own alone or with other individuals” (UNSD 2017).

In recent years, several composite indices of female entrepreneurship have been introduced based on the combination of different sources. Launched in 2015, the Global Women Entrepreneur Leaders Scorecard is based on sources such as the World Bank’s Global Findex database, the World Bank’s _Women, Business and the Law_ database, the World Economic Forum, Transparency International, the Global 3
Entrepreneurship Monitor, and the Global Gender Gap Index, among others. The Global Women Entrepreneur Leaders Scorecard identifies impediments to high-impact female entrepreneurship in 31 economies. High-impact female entrepreneurs are defined as those “who own and operate businesses that are innovative and growth oriented” (Aidis, Weeks, and Anacker 2015). A composite index of 21 indicators, the Scorecard highlights key aspects of an economy’s institutional and business environment, gender access issues and individual-level entrepreneurial characteristics.

The Global Entrepreneurship Index (GEI), developed by the Global Entrepreneurship and Development Institute (GEDI) in 2011, is another composite index of entrepreneurial activity. The GEDI launched the Female Entrepreneurship Index (FEI) in 2013. It measures the global development of high-potential female entrepreneurs, who are defined as “women who own and operate businesses that are innovative, market expanding, and export-oriented” (Terjesen and Lloyd 2015, 4). The FEI consists of 23 gender-specific variables that inform three sub-indices: (i) entrepreneurial environment, including equal rights and market size, secondary education, business risk, and access to childcare; (ii) entrepreneurial eco-system, including support and training for small and medium-size businesses and labor force parity; and (iii) entrepreneurial aspirations, including expenditure on research and development and external financing.

A comparative analysis of the existing data sets devoted to global entrepreneurship shows certain limitations. Most existing data sets and indicators are based on data which are largely self-reported by individuals or by domestic entrepreneurship experts. As a result, some of these data are reported sporadically or based on perceptions. Several indicators among the reviewed data sets represent composite indices that aggregate a set of different sources and other data points. A further limitation is the wide range of definitions of female entrepreneurship. These definitions can vary _—_ which can create issues of comparability among data sets. In addition, the various data sets use different input data about factors facilitating or impeding the development of entrepreneurship and output data measuring female entrepreneurial activity. A comparative analysis of the existing data sets, with a focus on their input and output indicators, is presented in Table A1 in the appendix.

The existing data sets related to female entrepreneurship usually apply a general approach that covers various types of business entities. They do not differentiate between sole proprietorships, LLCs or corporate organizations. However, several studies point to the importance of a differentiated approach to female entrepreneurship (Aidis and Weeks 2016; Estrin and Mickiewicz 2011; Terjesen and Lloyd 2015). For example, based on their analysis of the Female Entrepreneurship Index calculated for 77 economies, Terjesen and Lloyd (2015) suggest that “although all forms of female entrepreneurship are important, more sophisticated ventures require additional resources, skills, and aspirations” (2015, 5). A survey of high-tech firms conducted in 2004 by the Kauffman Foundation provides substantial evidence of the existence of discrepancies in organizational form between male and female business owners. Robb and Coleman (2009) conclude that women-owned high-tech firms are more likely to be organized as sole proprietorships or partnerships during their start-up year (38.7 percent versus 24.9 percent for firms owned by men) and are less likely to be organized as either corporations or as LLCs (61.3 percent versus 75.1 percent). Even at the initiation stage, male entrepreneurs tend to develop larger and more sophisticated businesses than women. In this respect, disaggregated data on the organizational form of women-owned businesses could provide new insights into lower levels of participation by women in growth-oriented entrepreneurship.

4
# **3. Methodology and Data Collection**

The Entrepreneurship Database was launched in 2007 to benchmark formal entrepreneurial activity across economies. An advantage of the Entrepreneurship Database is its reliance on official statistics that come mostly from business registries and national statistical agencies. The Entrepreneurship Database defines an entrepreneur as “any economic unit of the formal sector incorporated as a legal entity and registered in a public registry, which is capable, in its own right, of incurring liabilities and of engaging in economic activities and transactions with other entities” (Ács, Desai, and Klapper 2008, 267). In contrast to many entrepreneurship indices, the Entrepreneurship Database does not include the informal sector, owing primarily to the difficulties associated with quantifying the number of firms that comprise it. Considering that statistical agencies around the world define business entities in various ways, the Entrepreneurship Database takes into account their legal form. The standard unit of measurement provides comparable data on entrepreneurial activity across economies.

The Entrepreneurship Database helps clarify the relationship between new firm registration, the regulatory environment, and economic growth. Research using the Entrepreneurship Database shows a significant relationship between the level of cost, time, and procedures required to start a business and new firm registration (Divanbeigi and Ramalho 2015; Klapper, Lewin, and Quesada Delgado 2009; Klapper and Love 2010). A recent study, for example, shows that an improvement of 10 percentage points in the overall measure of business regulation (Doing Business distance to frontier score) is linked to an increase of around 0.6 new businesses per 1,000 adults (Divanbeigi and Ramalho 2015, 8). The Entrepreneurship Database also helps explain the relationship between entrepreneurship and financial development, including the impact of financial crises on the formation of new businesses in the economy (Klapper and Love 2011; Klapper, Meunier, and Diniz 2014).

The 2017 edition of the Entrepreneurship Database contains annual data for 143 economies on the number of limited liability companies (LLCs) registered (both new and total) between 2006 and 2016. The Entrepreneurship Database was expanded in 2017 to include a gender dimension of business ownership. To do so, it combines comparable cross-country data on new businesses registered in those economies where national statistics include sex-disaggregated data. Furthermore, recognizing the importance of a differentiated approach to entrepreneurship in terms of organizational form, the data on female and male business owners are collected at two levels—LLCs and sole proprietors. This allows for in-depth analysis of gender differences in business entry worldwide. The Entrepreneurship Database facilitates both a greater understanding of the dynamics of new business registration around the world and in-depth analysis of the relationship between gender and entrepreneurship at various organizational levels.

To ensure cross-country comparability, the Entrepreneurship Database employs a consistent unit of measurement that is applicable and available among the diverse sample of participating economies. The Entrepreneurship Database and World Bank Group’s Doing Business jointly developed a data collection methodology to measure entrepreneurial activity systematically. The primary sources of information for the Entrepreneurship Database are national business registries. In cases where the business registry is unable _—_ to provide the data, alternatives sources such as statistical agencies, tax and labor agencies, ministries of _—_ economy and chambers of commerce are used. The data collection process involves telephone interviews and email correspondence with business registries.

The gender-specific indicators used in the Entrepreneurship Database include the percentage of new female LLC owners, the percentage of new female sole proprietors and the percentage of new LLCs with female ownership. Table A2 in the appendix presents sources of sex-disaggregated data. The OLS regression analysis presented in this study uses two dependent variables: the percentage of new female LLC owners and the percentage of new female sole proprietors. Using these variables allows for the identification of 5
particular effects that institutional factors have on female entrepreneurship at different levels. The independent variables include the Women, Business, and the Law measure of legal rights disparities, years of women’s education, and account ownership. The control variable used is gross national income per capita. The descriptions and sources for the dependent and independent variables are included in Table A3 in the appendix.

The Entrepreneurship Database uses the World Bank’s groupings of economies based on income. All economies are divided into three income groupings: low income, middle income and high income. The indicator used for these groupings is gross national income per capita in U.S. dollars, converted from local currency (World Bank 2017). For geographic units, the Entrepreneurship Database also uses the World Bank’s regional groupings. Under this classification, participant economies fall into seven regions: East Asia and the Pacific (EAP), Europe and Central Asia (ECA), Latin America and the Caribbean (LAC), Middle East and North Africa (MENA), OECD high-income economies (OECD), South Asia (SAS) and Sub-Saharan Africa (SSA).

Of the 143 economies participating in the Entrepreneurship Database, 44 economies provided sexdisaggregated data on female and male entrepreneurship. Of these, 15 economies are classified as high income, 24 as middle income, and five as low income. They represent diverse cultural, political, institutional, geographic and socioeconomic environments. Table A4 in the appendix places the 44 economies that provided sex-disaggregated data into 21 groups, determined by their region and gender indicators. Of the 44 economies providing sex-disaggregated data, only 22 provided data on both new female LLC owners and new female sole proprietors. In seven economies, sex-disaggregated data were limited to the number of new female LLC owners and did not include data on sole proprietors. Conversely, 11 economies provided the data on the number of new female sole proprietors but did not provide data on female LLC owners. In one economy, Albania, sex-disaggregated data included the number of LLCs with at least one female business owner, but did not include either the number of new female LLC owners or new female sole proprietors. For 2016, observations related to new female LLC owners include 32 economies, while observations related to new female sole proprietors cover 35 economies.

A limited number of economies provided panel data on the number of new female LLC owners and sole proprietors over the last five years. Specifically, 24 economies reported panel data on the number of new female LLC owners between 2012 and 2016, while 28 economies provided the data on female sole proprietors for the same period. The insufficient coverage of sex-disaggregated data limits empirical analysis of female business entry and suggests the need to expand the collection of time-series data on female entrepreneurship over the coming years. The regression analysis is based on indicators calculated for 2016. The descriptive statistics, including the number of observations available for each indicator, are included in Table A5 in the appendix.

6
**Figure 2: Percentage and number of new female and male sole proprietors in 2016**

<!-- Start of picture text --> 100<br>90<br>80<br>70<br>60<br>50<br>40<br>30<br>20<br>10<br>0<br>New female sole proprietors New male sole proprietors<br>Source: Entrepreneurship Database.<br>Note: The labels show the absolute numbers of new female- and male-owned sole proprietorships registered in 2016.<br>Gender gaps in female business entry and ownership are associated with substantial losses to national<br>income and economic development at both the national and regional levels. While the data show that female<br>entrepreneurs choose to start their firms as sole proprietorships more often than LLCs, there was a<br>significant gender gap between female and male entrepreneurs in 2016. The average proportion of new<br>female LLC owners and sole proprietors in three income groups are shown in figure 3. Low-income<br>economies are characterized by the largest gaps in female business ownership at the level of both LLC<br>owners and sole proprietors.<br>Figure 3: Average income-group percentages of new female LLC owners and sole proprietors in<br>2016<br>40<br>35<br>30<br>25<br>20<br>15<br>10<br>5<br>0<br>Low income Middle income High income<br>New female LLC owners New female sole proprietors<br>13,701 132,465 1,060 3,888 17,988 168,252 1,716 12,217 219,709 113,622 1,478 21,971 285,078 185,556 17,200 73,478 51,840 152,133 19,367 8,650 1,373 8,934 101,717 19,952 7,470 4,861 17,115 2,582 1,134 30,677 2,854 7,769<br>73,504 39,960 5,809<br>New sole proprietors, by gender (%) 21,143 149,760 1,056 3,450 15,277 136,492 1,377 8,553 143,464 67,686 860 12,223 156,216 101,332 9,161 37,188 25,655 73,243 8,946 3,886 592 3,304 36,234 6,977 2,505 1,574 5,401 753 244 5,387 492 937 4,212 2,213 42<br>Austria Philippines Estonia Jamaica Tajikistan Malaysia Brunei Darussalam Romania France Netherlands Rwanda Belarus Germany Poland Taiwan, China Nigeria Croatia Italy Chile Georgia Suriname Mauritius Azerbaijan Senegal Zambia Kosovo Oman Mexico Jordan United Arab Emirates Mauritania Nepal Saudi Arabia Turkey Afghanistan<br>Average share of new female LLC owners and sole proprietors (%)<br><!-- End of picture text --> _Note:_ The labels show the absolute numbers of new female- and male-owned sole proprietorships registered in 2016.

Gender gaps in female business entry and ownership are associated with substantial losses to national income and economic development at both the national and regional levels. While the data show that female entrepreneurs choose to start their firms as sole proprietorships more often than LLCs, there was a significant gender gap between female and male entrepreneurs in 2016. The average proportion of new female LLC owners and sole proprietors in three income groups are shown in figure 3. Low-income economies are characterized by the largest gaps in female business ownership at the level of both LLC owners and sole proprietors.

**Figure 3: Average income-group percentages of new female LLC owners and sole proprietors in 2016**

_Source:_ Entrepreneurship Database.

8
The gender gap in business ownership is observed in every income group. However, women in low-income economies are proportionately less likely to start businesses at the level of either LLCs or sole proprietorships than those in middle- and high-income economies. The significant gender gaps observed in low-income economies suggest that few women are able to start new businesses.

One of the biggest gaps can be observed in the Middle East and North Africa region, where only one out of four women participates in the labor force (Gatti et al. 2013:10). Despite a marginal increase in women’s participation in economic activities in recent years, it is estimated that it would take 150 years for the economies of the Middle East and North Africa to reach the current world average for female labor force participation (Gatti et al. 2013, 10). The Entrepreneurship Database provides further evidence of the substantial gender gap in female entrepreneurship in the Middle East and North Africa region. Over the past five years, however, the number of women-owned businesses has risen steadily in some economies, including Morocco, Jordan and the United Arab Emirates. Figure 4 depicts the proportion of new female business owners in 2016 in the five economies in the Middle East and North Africa region included in this study. Morocco had the largest proportion of new female LLC owners (17.7 percent), followed by Jordan (15.5 percent) and Oman (15 percent).

**Figure 4: The level of female business ownership in select economies in the Middle East and North Africa in 2016**

<!-- Start of picture text --> 20 30<br>18<br>16 25<br>14 20<br>12<br>10 15<br>8<br>6 10<br>4 5<br>2<br>0 0<br>(%)<br>one female owner (%)<br>Share of new female LLC owners Share of new LLCs with at least<br><!-- End of picture text --> _Source:_ Entrepreneurship Database.

Levels of female business ownership are relatively low in the Middle East and North Africa region compared to those in the OECD high-income group. Women entrepreneurs in the Middle East and North Africa face barriers including financial constraints and a lack of female-friendly entrepreneurship policies. For example, women in the Middle East are half as likely as men to have a formal bank account (DemirgüçKunt et al. 2015). Furthermore, women business owners across the region identify similar challenges to doing business, such as accessing financial management skills training, finding and keeping good employees and securing capital (CAWTAR and IFC 2007, 7). Inequalities surrounding legal rights also hamper the participation rate of female entrepreneurs. Gender legal disparities are higher than the estimated world average in the Middle East and North Africa (Iqbal et al. 2016, 11). Of the regional economies included in the Entrepreneurship Database, Morocco has the lowest measure of legal rights disparities; Saudi Arabia has the highest (Iqbal et al. 2016, 13). Indeed, legal rights disparities correspond to differences in female business ownership in these economies.

9
The gender gap in business ownership precludes the economies of the Middle East and North Africa from benefiting from the gains associated with female entrepreneurship, including job creation and economic _—_ development. A “full-potential” scenario in which women participate in the economy at the same rate as men _—_ would add an estimated $2.7 trillion, or 47 percent, to annual regional GDP by 2025 (Woetzel et al. – 2015, 34 35). This underscores the importance of developing policies and programs that support female entrepreneurship.

Of the 44 economies that provided related sex-disaggregated data, 24 provided data on new female LLC owners between 2012 and 2016 and 28 reported the data on new female sole proprietors for the same period. These data show that _—_ in some economies _—_ there was a significant increase in the percentage of new female LLC owners and sole proprietors over this five-year period. Figure 5 shows that the gender gap in business ownership narrowed in Azerbaijan, Belarus, Georgia, Kosovo, Nepal, Oman, and Romania between 2012 and 2016. The largest increase in the proportion of female LLC ownership is reported in Nepal, where new female LLC ownership rose from 4 percent in 2012 to 11 percent in 2016. Conversely, a decreasing number of new female LLC owners is reported in economies including Afghanistan, Saudi Arabia and Turkey. In Saudi Arabia and Turkey, a decrease in the number of new female LLC owners was accompanied by an increase in the number of newly-registered LLCs compared to 2012. An increasing proportion of new female sole proprietors is observed in economies including Azerbaijan, Georgia, Kosovo, Nepal and Oman, where the gender gap narrowed compared to 2012. The largest overall increase is observed in Kosovo where the proportion of new female business owners rose from 9 percent in 2012 to 25 percent in 2016.

**Figure 5: Economies with the most significant growth in the proportion of new female business owners**

<!-- Start of picture text --> 45 35<br>3,886<br>33,708 38,050 3,492<br>40 32,267 31,795 29,108 3,151<br>30<br>35 2,077 2,476 19,456 36,234<br>19,373<br>3,497 7,102 25 14,705 3,351 5,401<br>30 14,004<br>5,839<br>25 4,197 4,957 20 3,053 2,857 1,574<br>3,774 6,109 3,186 1,609<br>20 3,938 4,415 740 15 2,340<br>381 1,265 1,220<br>130 257 279<br>15<br>10<br>720 719<br>10 582 937<br>3,640 4,834<br>3,217 5<br>5 1,181 249<br>0 1,221 0 150<br>2012 2013 2014 2015 2016 2012 2013 2014 2015 2016<br>Kosovo Nepal Georgia Nepal Kosovo Oman<br>Belarus Romania Georgia Azerbaijan<br>New female LLC owners (%)<br>New female sole proprietors (%)<br><!-- End of picture text --> _Source:_ Entrepreneurship Database. _Note:_ The labels show the absolute numbers of new female LLC owners and sole proprietors.

10
<!-- Start of picture text --> 8<br>¢ + °<br>10} ¢ e ¢ .<br>E *e °<br>38 oo «°? ry .<br>oO<br>Zz ry ° e<br>° ¢ °<br>° .<br>10 20 30 40 50<br>WBL measure of legal rights disparaties<br><!-- End of picture text --> <!-- Start of picture text --> 8<br>Oo °<br>°<br>a<br>3 $ : °<br>a . .<br>= . . t °<br>: . . +<br>as<br>=<br>e<br>° a<br>° :<br>10 20 30 40 50<br>WBL measure of legal rights disparaties<br><!-- End of picture text -->
<!-- Start of picture text --> 8<br>=S<br>[2£ ¢ * ry<br>i) ° ee °<br>4 o° °<br>=2 .+ o,° o ¢<br>OoE ° .<br>38<br>a . .<br>Zz « ° . ry<br>oe<br>.<br>°<br>0 5) 10 15<br>Education (years), female aged over 25<br><!-- End of picture text --> <!-- Start of picture text --> o<br>oS c<br>°<br>°<br>3= t .<br>o =i) . *«<br>5a ° e<br>°<br>®° ry ° 6<br>E +<br>gs<br>= .<br>g +<br>oe<br>° 2<br>0 5) 10 15<br>Education (years), female aged over 25<br><!-- End of picture text -->
<!-- Start of picture text --> 8<br>S<br>so02 .<br>cv .<br>3<br>oO ° . ry . o<br>4<br>4 % .<br>a +<br>= } °<br>Lo<br>ae<br>. . o ¢<br>.<br>°<br>0 20 40 60 80 100<br>Women with an account (%)<br><!-- End of picture text --> <!-- Start of picture text --> o<br>=] °<br>°<br>a<br>9 + . °<br>2 °<br>2 9 r<br>= .<br>8 ° , 3<br>a . °<br>@ °<br>°<br>3 ry r %e<br>2 -,<br>Eo<br>2s<br>°<br>° a<br>° 2<br>0 20 40 60 80 100<br>Women with an account (%)<br><!-- End of picture text -->
<!-- Start of picture text --> ®<br>°o<br>Oo e<br>S . . o.? .<br>‘= ° £ °<br>Lo<br>20<br>o bd °<br>Zz o . ry<br>°<br>6 ° °<br>° .<br>0 5 10 15 20<br>Borrowed froma financial institution, female (%)<br><!-- End of picture text --> <!-- Start of picture text --> ©<br>Oo oJ<br>od<br>oJ<br>5 ry . .<br>2 of<br>Sa °<br>a oJ .<br>Eo<br>2s<br>z .<br>& + .<br>°<br>e °<br>° £<br>0 5 10 15 20<br>Borrowed from a financial institution, female (%)<br><!-- End of picture text -->
# **6. Conclusion**

Comparisons of gender-neutral and gender-specific indicators of entrepreneurship highlight the importance of collecting data on female business owners. The systematic and consistent collection of such data is crucial for developing meaningful, evidence-based recommendations and public policies related to women’s economic empowerment and their contribution to international development. The lack of sexdisaggregated data in many economies limits the understanding of the issues surrounding female entrepreneurship. As previously stated, a number of national statistics authorities do not compile sexdisaggregated data on entrepreneurial activity.

This study suggests that the gender gap in business ownership remains high in many economies around the world. In the vast majority of the analyzed economies, less than one-third of new LLC owners are women. Although sole proprietorships are more frequently used by female entrepreneurs, only three economies have similar or equal number of women business owners relative to men. The gap in female entrepreneurship is especially apparent in low-income economies where women are much less likely than men to start a new business. This suggests a need to intensify efforts to boost female business ownership. Progress in this area should be tracked closely over the coming years through expanding the collection of standardized and country-comparable sex-disaggregated data on business entry and ownership within the Entrepreneurship Database.

This study also explores interlinked and reinforcing factors that impact female entrepreneurship, including women’s financial inclusion, legal rights disparities and the gender gap in education. This analysis shows that national economies should prioritize the expansion of financial inclusion, equal legal rights and access to education for women. The elimination of gender disparities in these spheres also contributes to the narrowing of the gender gap in entrepreneurship. Sustainable Development Goal (SDG) 5, which targets all forms of discrimination against women and girls, provides an opportunity to tackle these issues holistically. The achievement of SDG 5 is critically important. Without boosting women’s economic participation and moving towards gender equality, it will be significantly more challenging for economies to achieve other SDGs or the 2030 Agenda for Sustainable Development and, most importantly, to reach their full economic and social potential. In this respect, further research is needed to provide policy-relevant evidence on female entrepreneurship. Such research could measure female directorship in addition to female ownership. The development of solutions to reduce the existing gender gap in business formation would also require in-depth analysis of business demography, characteristics of women-owned businesses, and determinants of their growth.

15