46% of Families Start Businesses Despite the Economic Crisis | 46% de familias emprende a pesar de la época de crisis

By Dayana Flores, Opinion:

This is due to the fact that in three out of ten households, there have been layoffs. Cochabamba is the third department in Bolivia where people are most encouraged to start businesses.

Un emprendedor ofrece productos elaborados con insumos naturales./ DICO SOLÍS
An entrepreneur offers products made with natural ingredients./ DICO SOLÍS

How is the economic crisis affecting entrepreneurship? Nearly half of all families decide to start a business under these economic conditions; however, they do so “out of necessity.”

These are some of the findings of the study titled “Economic Crisis in Bolivia and Its Effect on Employment and Entrepreneurship,” led by José Luis Barroso of the Research Center of the Department of Administration, Economics, and Finance (Cidaef), and associate researcher at the Center for the Study of Economic and Social Reality (CERES).

In the study, Barroso explains that while there is a significant percentage of new businesses, the majority “are driven more by necessity than by opportunity.”

This is because families in general are facing layoffs. Reportedly, in three out of ten households, at least one member has experienced job loss.

This situation is being replicated across all socioeconomic levels. However, Barroso points out that the layoff rate is lower in the “wealthiest level,” “which means that the middle and lower classes are the most affected, possibly because the upper levels may be more protected by more formal jobs or more stable contracts, which explains the slightly lower layoff rate.”

He adds that the most vulnerable sectors are the poor and the middle class, due to their precarious employment situations.

NEW BUSINESSES

Based on a survey, the researcher confirmed that 46% of families made the decision to start a business during the past year.

Those who take the most risks are from the middle class. In the researcher’s opinion, this suggests that middle-class families may be more driven to become entrepreneurs, possibly due to the need to generate additional income or simply to mitigate the effects of the labor market.

In other words, “the rate of entrepreneurial intention is higher in the middle sectors and lower among the wealthiest.”

In terms of cities, Cochabamba ranks third where people are most encouraged to start a business. The highest entrepreneurial spirit is found in La Paz.

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