FORMAL ENTREPRENEURIAL ENTRY AFTER THE COVID-19 SHOCK: CROSS-ECONOMY EVIDENCE ON RESISTANCE, RECOVERY AND PRE-PANDEMIC MOMENTUM, 2006-2024

Abstract

This paper asks a straightforward question: after the COVID-19 disruption, did formal entrepreneurial entry recover its earlier momentum, or did registration activity merely return to familiar levels? The evidence comes from the eighth edition of the World Bank Entrepreneurship Database for 2006-2024. We remove the 29 offshore financial-centre labels identified in the source workbook, leaving 2,493 economy-year observations for 158 economies. New business density is measured as newly registered limited-liability companies per 1,000 people aged 15-64. For every eligible economy, a log-linear trend is fitted to at least seven observations ending in 2019; eligibility also requires three or more observations between 2020 and 2024. The final trend sample covers 119 economies and 572 post-period observations. Economies carry equal weight, while 95% uncertainty intervals are obtained from 4,999 economy-level bootstrap resamples. Entry density fell 10.8% below its fitted path in 2020 [-15.8%, -5.8%]. The gap was no longer distinguishable from zero in 2021, and the estimate for 2024 was -4.8% [-15.2%, 7.2%]. Of the 115 economies observed in 2019, 2020 and 2024, 72.2% matched or exceeded their 2019 density by the final year. In 2024, low-baseline economies were 8.2% above trend [-16.5%, 41.1%], while high-baseline economies were 15.5% below trend [-28.0%, -2.1%]. Yet the direct high-minus-low difference was -23.7 percentage points [-59.4, 4.4], which is too imprecise to establish separate group paths. The 2019 placebo lies close to zero, and the observable attrition checks show no systematic differences. Alternative trend windows reproduce the initial disruption but not the same later gap. Formal entry, in short, recovered quickly on average. Evidence that it regained or surpassed its previous momentum is much weaker. The study concerns registration activity and does not measure survival, employment, productivity or the causal effect of the pandemic