The Great Recession

I was honored to have a chance to talk virtually with Dr. Kurt Becker, who is the Vice Dean for Research, Innovation, and Entrepreneurship at NYU Tandon, about his thoughts and experience towards the development of entrepreneurship in Poly & NYU Tandon. In the conversation, he mentioned that the financial crisis of 2007-2008 triggered Poly’s thinking of high-tech entrepreneurship, which was a crucial catalyst for Poly's development in entrepreneurship.

The financial crisis of 2008, or Global Financial Crisis, was a severe worldwide economic crisis that occurred in the early 21st century. It was the most serious financial crisis since the 1929 Great Depression (“Financial Crisis of 2007–2008 - Wikipedia”). The economic slump began when the U.S. housing market went from boom to bust, and large amounts of mortgage-backed securities (MBS's) and derivatives lost significant value. Dubbed the Great Recession, this economic contraction saw gross domestic product decline 4 percent and the unemployment rate more than double from 4.9 percent to 10.1 percent. 

The Great Recession’s Effect on Entrepreneurship

While the media was full of reports about how the recession affected big business and consumers, it was largely silent on what happened to entrepreneurship. Economists are divided on the matter. Discussion diverges. According to Shane, ‘the negative effect of the Great Recession was largest on the most substantial entrepreneurial efforts, adversely affecting new employer firms more than nonemployer businesses, and incorporated self-employment more than unincorporated self-employment’. By contrast, according to Fairlie, ‘The Great Recession caused many businesses to close their doors or file for bankruptcy protection, but the rapid rise in unemployment also drove an increase in entrepreneurship. For many people across the U.S., the potential opportunities from opening a new business outweighed the alternatives, despite slumping demand and tight credit.’