Immigrants in Sweden start their own businesses for lack of alternatives and political pressure


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Tuesday, 05 July 2011
One very important fact about the working life of the immigrants in Sweden is that many are self-employed. Among non-European immigrants, the numbers who have decided to set up their own businesses has doubled since the 1990s. But this is sometimes a "forced" gamble because many go bankrupt after just one year, according to a recent study.

Researchers at the University of V�xj� in Sweden found that immigrants are desperate to contribute but are heavily discriminated in the jobs market for a variety of reasons. As such they take the approach to start their own business as one option and a gamble. But their businesses will be more likely to fail just after a very short time – usually within a year.

“Our study shows that firms set up by foreign-born have a shorter survival chance than firms started by the ‘real’ Swedish people,” says Lina Andersson, PhD in economics at V�xj� University.

She also notes that many immigrants who cannot get a job are encouraged by the politicians to become entrepreneurs. However, it is a forced solution in the absence of alternatives, such as unemployment or low incomes. But it is a resort with consequences.

“A side effect is that the wrong people will be employed. They had probably worked better as employers for other people”.
A known fact is that foreign-born Swedish often have difficulty getting financing for their companies especially through the banks. Since the entry requirements are low in the service sector, it is often companies in the sector which they find it easier to start, according to Lina Andersson.

Since to raise the required capital is heavy, this group is forced to run a sole trading type of business as their legal form of business whereas traditional Swedes are most likely inclined in stetting up limited liability companies.

“It is primarily immigrants from the Middle Eastern countries that show a largest zeal for increase in new businesses. In many cases, they have also had business experience in their home countries when they establish a new company in Sweden,” says Lina Andersson.

The study at V�xj� University shows a sharp increase in the proportion of entrepreneurs among male immigrants from Iran, Iraq, Syria and Lebanon. From the beginning of the 1990s and until 2007 the percentage doubled.

The same trend shows women from overseas countries. In some cases, it is about more than doubled among women, but it also increases from low levels.
Immigrant women from overseas countries are investing in marketing and administration as well as in hotel, restaurant and recreation.
So taking about contribution immigrants make in Sweden…
By team

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