The important contribution that migrants make to the current and future success of the UK economy has been highlighted in new research, which found that people from ethnic minority and immigrant backgrounds are twice as likely as their white British counterparts to be early-stage entrepreneurs.
The analysis of data from the Global Entrepreneurship Monitor (GEM) by researchers at Aston University in Birmingham also found that women, people from ethnic minority communities and migrants are more likely to be motivated by creating ‘meaning’ – rather than just making money – when starting a business than white British men.
The GEM report contains data on Total early-stage Entrepreneurial Activity (TEA), which looks at the proportion of people who are ‘nascent entrepreneurs’ at the early stages of setting up a business, as well as new business owners who have been running their firm for between three months and three-and-a-half years.
Since the financial crisis, the proportion of people from ethnic minorities and migrants starting their own firms has risen sharply, at the same time as more modest increases among white people and life-long residents.
In 2017, the TEA rate among non-white Britons was 14.5%, compared to 7.9% for white Britons.
A similar increase can be observed among immigrants to the UK, both white and non-white. In 2017, 12.9% were early-stage entrepreneurs, compared to 8.2% among the UK-born population as a whole [all ethnicities].
For both ethnic minority groups and migrants, this difference with the white and UK-born populations has widened substantially since 2008. Before this, both groups’ rates were on a downward trend and set to converge with the more static rates among white and life-long UK residents.
“We’ve seen a big rise in people deciding to start their own business since the financial crisis,” explained Mark Hart, Professor of Small Business and Entrepreneurship at Aston Business School. “This is particularly pronounced among UK-born people from ethnic minorities and immigrants to the UK – both of these groups are now nearly twice as likely to be early-stage entrepreneurs as white British people.”
“So what this tells us is that minorities and immigrants are making a big contribution to the prosperity of the UK, growing new firms and creating jobs in our communities. Often, they’re setting up their businesses with the express aim of having a social impact beyond simply making money,” he said. “These findings are particularly relevant as the UK heads towards Brexit. We need to ensure we remain an attractive place for enterprising immigrants, who make a big contribution to our economic dynamism as a nation.”
“The reasons for the high levels of early-stage entrepreneurship among minority communities and immigrants in the UK are complex, but the evidence suggests that a family business background, cultural attitudes and educational achievement all play positive roles,” added Jonathan Levie, Professor at the Hunter Centre for Entrepreneurship at Strathclyde University. “Perceived discrimination and lack of recognition of foreign qualifications in the labour market may also make a difference, but it’s notable that the vast majority of people who become entrepreneurs in the UK do so out of opportunity, not necessity.”
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