Founding new enterprises and innovation are key elements of production transformation strategies. Innovative start-ups can contribute to closing productivity gaps and moving countries towards inclusive development. There is growing worldwide interest in actions to promote the creation and expansion of start-ups. Today’s start-up world is diverse, and public policies for start-ups exist in OECD countries and developing countries. Although the innovation and production systems of emerging countries are still nowhere near as dense as those of OECD countries, the start-up landscape has become more dynamic, with innovative solutions emerging and mindsets changing in emerging and developing countries.

In the global knowledge economy, the ability of countries to grow sustainably and redistribute income depends largely on whether they can translate productivity gains into better welfare for the population. Innovation and the creation of new firms are essential in this virtuous process of productivity growth. Start-ups of all kinds – those that use new technologies, those that offer new services and products, and those that provide solutions to emerging problems – play an important role in transforming a country's production and can boost and diversify the economy. Today, start-ups are no longer exclusive to Silicon Valley; many ecosystems have emerged in other regions too. However, start-ups must overcome major hurdles to get up and running and to expand, especially in developing countries. Despite the growing number of start-ups in emerging and developing countries, data on start-up ecosystems, pro-startup policies and the impact of support instruments are still in short supply. This report provides valuable new knowledge about the state of start-ups and policy actions implemented by emerging and developing countries.

Sustainable, inclusive growth depends largely on a country’s ability to translate productivity gains into better welfare for the population. Innovation and the creation of new firms are essential to drive this virtuous process of productivity gains. Startups bring new products and services to the market based on scientific discoveries and new applications of existing knowledge. They create new markets and business models and offer novel solutions to emerging problems. Start-ups also bolster competition for innovation and encourage the development of a dynamic business environment, and they have the potential to boost and diversify the economy. However, these enterprises must overcome major hurdles to get up and running and to expand, especially in developing countries. Start-ups do not emerge in a vacuum. They need entrepreneurial talent, technical skills, business management capabilities, services and legal frameworks that foster their creation and expansion. They also need investment in infrastructure. Public policies can adopt various courses of action to reduce the barriers encountered by those looking to create or expand start-ups, and governments can work with the private sector on actions to support the development of an ecosystem in which there are dynamic start-ups.

Start-up Latin America 2016 presents an overview of policies to support start-ups in Chile, Colombia, Mexico and Peru. This overview presents the main results and recommendations from the study. Even though there is an unfavourable macroeconomic climate and there are still innovation gaps between Latin America and more advanced countries, start-ups are revealing a different, more dynamic side to the region. Since 2010, the concept of start-ups has attracted growing attention from the media, investors and policy makers in Latin America, and countries have implemented various programmes to support start-ups. These policies to promote startups have evolved rapidly, and in the space of just six years, their design, focus and structure have changed significantly, showing initial results and revealing a change in people’s perceptions of the region as a place for entrepreneurship and innovation.

There is growing interest worldwide in actions to promote the creation and expansion of start-ups. Until a few years ago, startups were associated almost exclusively with Silicon Valley, but today they are much broader in scope and can be found outside the United States. Start-ups provide innovative solutions, create new markets and reinvigorate the business community. The emergence of start-ups depends not only on entrepreneurial spirit, but also on an environment (services, infrastructure, financing and regulatory framework) that is conducive to their emergence and expansion. National and local governments, in conjunction with the private sector, actively promote start-ups and seek to create incentives for their development. This chapter summarises definitions of start-ups and presents the rationale behind state intervention in this area and the matrix of instruments used to promote start-ups. The chapter concludes by identifying the lessons learned from other countries in designing and managing pro-startup policies.

This chapter presents an overview of policies to support start-ups in Latin America, based on the experiences of Chile, Colombia, Mexico and Peru. It is an update of the first report on start-up policies in the region (OECD, 2013). The chapter identifies lessons, results and challenges for the future. Since 2012, the concept of start-ups has attracted growing attention from many stakeholders in Latin America, from media and innovation experts to investors and policy makers. During that time, several countries have adopted policies to support start-ups. Unlike more traditional methods to support innovation and competitiveness, these policies have evolved rapidly. In just a few years, they have improved their design, focus and structure. Results are beginning to emerge, especially regarding people’s perceptions of the region and its image as a place for innovative entrepreneurship.

This chapter presents an overview of policies to promote start-ups in Chile. Support for start-ups has shifted from a pilot phase to a more structured one in co-ordination with the national transformation strategy. Chile is strengthening the financing chain for start-ups, especially in early stages and is introducing new support services to entrepreneurs, including mentoring networks and collaborative workspaces. The country has also introduced conditionalities and incentives to encourage entrepreneurship in the regions within the country, to attract citizens who have studied abroad to return to Chile to do business, and to support social inclusion through entrepreneurship. It has taken steps to improve the legal framework for starting businesses, including a law to enable people to start a business in one day.

This chapter presents an overview of policies to support start-ups in Colombia, focusing on changes that have taken place between 2012 and 2016. Like in other Latin American countries, the promotion of start-ups is an emerging and evolving topic in Colombia. In 2012, Colombia launched the iNNpulsa programme to promote entrepreneurship. Colombia’s pro-startup policy seeks to attract investment from financial institutions in start-ups, as well as to promote a business culture in the country. One prominent feature in the country is the growth of start-ups in cities like Bogotá and Medellín, which are looking to become hubs for start-ups in the country and in Latin America.

This chapter presents an overview of policies to support start-ups in Mexico. Between 2012 and 2016, Mexico has stepped up its support for start-ups. The country has bolstered institutions to promote start-ups and increased early-stage financing, thus addressing one of the main challenges identified in the first review of policies to promote start-ups (OECD, 2013a). It has also invested in promoting an entrepreneurial culture and creating an image of Mexico as a place for enterprises with a global impact. In supporting start-ups, Mexico is seeing the world as a potential market for exports by its start-ups and as a source for allies and partners for innovative projects.

This chapter presents an overview of policies to support start-ups in Peru. Start-ups are still an emerging phenomenon in the country. In line with the wave of interest in start-ups in Latin America, Peru began to prioritise support for start-ups in 2012, when it introduced Start Up Perú. Between 2012 and 2016, Peru has advanced in structuring its policies to promote start-ups, making Start Up Perú its main support programme. The country has introduced seed capital for entrepreneurs and incentives for incubators and angelinvestor networks. Peru has also promoted the launch of science start-ups to solve key problems in the country in the areas of health, agriculture and the environment. For start-ups to flourish and contribute to Peru’s productivity, the start-up ecosystem needs to become denser, private investors must become willing to back startups, and the country needs to strengthen its overall skills in science and technology.