The Global Entrepreneurship and Development Index Methodology

Abstract

While composite indicators have becoming popular in many fields over the last two decades, the Global Entrepreneurship and Development Index (GEDI) is the first complex index focusing on the multidimensional quality rather than the quantity aspects of entrepreneurship. GEDI is similar to other indices having a complex structure consisting of variables (31), pillars (14), and sub-indices (3). However, the GEDI methodology differs from the others in two important respects: (1) it combines individual and institutional variables and (2) it considers the interdependencies of the system. For the interdependencies we developed a Penalty for Bottleneck (PFB ) methodology. The central tenet of the PFB is that the performance of the system depends on the weakest link. Higher scoring pillars cannot exhibit their full effect on the performance of the system because of the bottleneck. The uniqueness of this methodology is that the elements of the system are only partially substitutable with each other.

Keywords: Penalty for bottleneck, GEM, GEDI, entrepreneurship index

JEL Classification: L26, C38