How does the United States compare to other nations when it comes to entrepreneurship? In Global Entrepreneurship and the United States, a new paper from the Office of Advocacy, Zoltan J. Acs and Laszlo Szerb assessed this question using the Global Entrepreneurship and Development Index (GEDI).
The GEDI compared the contextual features of entrepreneurship in 71 countries over a decade, including both quantitative measurements (such as the number of existing firms and startups) and qualitative measurements (such as the education level of founders and employees or the number of high-growth startups). It focuses on three broad areas:
- Entrepreneurial attitudes: a society’s basic attitudes toward entrepreneurship, as reflected in education and social stability.
- Entrepreneurial activity: what people are doing to improve the quality of human resources and technological efficiency.
- Entrepreneurial aspirations: how much of the entrepreneurial activity is directed toward innovation, high-impact entrepreneurship and globalization.
The United States ranked third overall, first in entrepreneurial aspirations, sixth in entrepreneurial attitudes, and eighth in entrepreneurial activity.
Given how the U.S. is generally considered a leader in entrepreneurial innovation, how did the country rank relatively low in some key areas? Here’s a look at the nation’s strengths and weaknesses as revealed by the report.
- U.S. entrepreneurship has slowed down - a change that has its roots in several events:
- The end of the high-tech bubble of the 1990s cut back on the number of tech startups and companies.
- The recession has hampered business growth.
- New immigration policies put in place after 9/11 have limited the entry of skilled workers into the U.S. “[Other] countries … have been more pragmatic by giving strong incentives to attract educated, skilled workers to their shores and to keep them there with offers of residency and citizenships,” Acs and Szerb wrote.
Despite these weaknesses, the U.S. earned high marks for startup skills, competitiveness and the development of innovative new technologies. “The findings of this paper should serve more as an eye-opener than as a cause for alarm,” the authors wrote. “The United States maintains its place among the leading entrepreneurial economies. Its performance is still superior in most respects to the averages for innovation-driven and efficiency-driven economies. Its strengths in the skill of its workers, the size of its markets, the institutional support for its people, and the aspirations of the American population are strong and robust.”
In fact, the authors note, one reason the U.S. rated a bit lower in some entrepreneurial rankings could be that the rest of the world is learning from us and catching up. In that sense, our innovativeness is still leading the way.
For more information, visit the Office of Advocacy website.