The geography of superentrepreneurs | Newgeography.com
Which parts of the world have given birth to the most successful entrepreneurs? This is a question answered by the superentrepreneurs project. This project is about the study of high-end entrepreneurship and focuses on nearly 2,500 people around the world who have built billion-dollar fortunes, starting new businesses or turning small businesses into large successful companies. It’s about measuring the tip of the iceberg; by looking at superentrepreneurs, one can understand which countries are more conducive to free enterprise in general.
Overall, the United States leads the world in high-impact entrepreneurship. There are 3.1 superentrepreneurs (self-made billionaire entrepreneurs) per million adults in the United States, far outpacing other major economies. By comparison, there are 1.7 superentrepreneurs per million adults in Canada and 1.1 in Oceania. China has a higher concentration of new high-impact entrepreneurs (0.9) compared to Europe (0.8). Given the level of economic development in Europe, this part of the world lags behind in high-impact entrepreneurship. The lack of superentrepreneurs reflects the fact that Europe still largely relies on old fortunes, rather than new ones founded by new businesses.
At the same time, there is a European entrepreneurial paradox. The paradox is that half of the top 10 countries with the most superentrepreneurs per capita are in Europe – while Europe as a whole has a relatively limited concentration of superentrepreneurs. Singapore has the highest concentration of superentrepreneurs in the world, followed by Switzerland, one of Europe’s leading knowledge economies. Cyprus, Sweden, Ireland and the United Kingdom are four other European economies that feature in the world’s top 10. Cyprus is a small country with an advantageous tax system, Sweden spends the most on research and development in Europe, and Ireland has a free trade approach that has attracted many tech companies – especially from the United States – to the fast growing island nation. The United Kingdom is the most enterprising of the major European economies.
Yet other major European economies, such as France, Germany, Italy and Spain, have few superentrepreneurs. Eastern European countries lack the size and market development to spawn many superentrepreneurs. Consequently, Europe has a lower concentration of high-impact entrepreneurs, per million adults, even compared to China. Yet Europe has a higher standard of living than China, but the difference is that much of the wealth in Europe is ancient, while much of the wealth in China was founded during the last generation.
Superentrepreneurs push for various forms of innovation in the businesses they create. The main benefit to society is job creation, as one more superentrepreneur per million adult population is linked to a 0.88 percentage point drop in unemployment. The effect is strongest for the extended middle class with intermediate education. For those with a high school education and perhaps additional job training, but no college or university degrees, one more superentrepreneur per million adults is linked to a 1.1 percentage point drop in unemployment.
Sometimes the self-employment rate is used as a measure of entrepreneurship. However, the two concepts are quite different. The global trend is that countries with a lower level of economic advancement have many self-employed people, but few superentrepreneurs. In India, for example, 76% of adults are self-employed and only 0.1 in a million adults are superentrepreneurs. In the United States, on the other hand, 6% of the adult population is self-employed, while there are up to 3.1 superentrepreneurs per million inhabitants. In countries with well-functioning market economies, entrepreneurs create jobs for large groups of people, while in countries with limited free enterprise, many become self-employed out of necessity.
Most superentrepreneurs are men, and only 5% of the nearly 2,500 superentrepreneurs worldwide are women. Among China’s high-impact entrepreneurs, no less than 8% are women. Africa, as well as Central and Latin America, has few superentrepreneurs, but a fairly high share of them are women. In the United States, 4% of superentrepreneurs are women and the figure is less than 3% in Europe as well as in Canada. In Oceania, all superentrepreneurs are men. The trend we see is that parts of the world that are open to entrepreneurship in female-dominated fields, such as education, health care and elderly care, are where many women become self-made billionaires.
We find that many policies are positively related to the promotion of superentrepreneurs. Strengthening property rights, making it easier to manage businesses, reducing taxes on profits and capital gains, and improving the level of knowledge in schools are the changes needed for countries to have more high-level entrepreneurs. Again, this is measuring the tip of the iceberg. Countries that strive to attract more superentrepreneurs need to open up to policies that support entrepreneurship in general. While this will result in new superentrepreneurs, it will also lead to many new medium-sized businesses that will thrive. Encouraging high-end entrepreneurship is linked to job growth and technological development. Even for countries that are already doing well, there are good reasons to pursue entrepreneurship-friendly policies.
Nima Sanandaji, Director of the European Center for Entrepreneurship and Policy Reform
Klas Tikkanen, COO Nordic Capital
Kristoffer Melinder, Managing Partner Nordic Capital
Main image: world map via Wikimedia.