In these uncertain times, it’s more important than ever to boost prosperity and ensure as many people as possible have the security of a job – and entrepreneurship is essential to that mission.
Analysis of the 2,500 people who have created wealth of at least $1bn through entrepreneurship, so-called ‘superentrepreneurs’, shows a clear link between unemployment and exceptional entrepreneurship. Countries with a higher proportion of superentrepreneurs in the population also have lower unemployment.
The good news is that the UK is already one of the world’s leading countries in successful entrepreneurship. There are 1.8 superentrepreneurs per million people in the UK. In a comparison of countries with at least one million inhabitants, the UK ends up in ninth place globally. Among the top ten countries, six have an Anglo-Saxon legal tradition, as they are former British colonies. This includes Singapore, which has the highest share of superentrepreneurs in the world (4.7 per million inhabitants), the US (3.1), which ranks highest amongst larger economies, Ireland (1.9) and Australia (1.8) which rank slightly above the UK, and Canada (1.7).
Each superentrepreneur more per million adult inhabitants, is linked to 0.9 percentage points lower unemployment in total – and 1.1 percentage points lower unemployment for the middle class. If the rate of superentrepreneurs in the UK increased by 20%, to bring it broadly into line with Singapore at 4.8 per million inhabitants, it would create 110,000 more jobs and a circa 0.3 percentage point drop in unemployment (based on International Labour Organization data on the labour market).
And superentrepreneurs are just the tip of the iceberg. For jobs and the technologies of the future to grow, countries need to stimulate entrepreneurship at every level. The more we allow medium-sized and smaller companies to grow, the more likely we are to see superentrepreneurs rising to the top. Yet the UK has fallen behind many of its former colonies when it comes to creating a favourable climate for free enterprise.
Half of the top 10 countries with highest share of superentrepreneurs in the world are in Europe, but the variations are high in Europe, and many other countries in the continent have low levels of superentrepreneurs. Taken together, Europe has a significant lack of superentrepreneurs – particularly amongst women.
In Europe, there are 1.5 male superentrepreneurs per million adult men, but the rate for women is only 0.04 superentrepreneurs per million adult women. For the UK the figures are 3.4 for men and 0.19 for women, in China the ratio is 1.6 to 0.15, and in the US 5.9 to 0.26.
Europe has a clear deficit of women’s entrepreneurship, in part because education, health, and elderly care in European systems are limited by public sector oligopolies and regulations. That means parts of the economy that are dominated by women offer limited opportunities for high-impact entrepreneurship. In places such as China, India, Asia, and Africa, the economic systems are more open to entrepreneurship in welfare sectors, which may explain why there are more female superentrepreneurs.
The countries that have a higher proportion of superentrepreneurs among the population are those that combine strong property rights with lower corporate taxes, lower capital gains taxes, less regulatory hassle (according to Doing Business international surveys) and better school results (according to the latest PISA survey). It is quite possible for the UK to climb the ranking of countries with most superentrepreneurs, but this ambition needs to be followed by concrete solutions – growth-orientated policy is one element, but so too are better educational outcomes.
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