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SuperEntrepreneurs – and how your country can get them

The backgrounds of 1,000 self-made men and women who have earned at least $1 billion dollars through entrepreneurship – the SuperEntrepreneurs – are examined in SuperEntrepreneurs – and how your country can get them, by Tino and Nima Sanandaji.

See an introductory infographic by clicking here.

Media Impact:

Their original research (see below for the endorsements of the academic paper on which it is based) shows these men and women founded half the largest new firms created since the end of the Second World War. They authors find that:

  • The proportion of SuperEntrepreneurs varies significantly across countries. Hong Kong has the most, with around three SuperEntrepreneurs per million inhabitants, followed by Israel, the US, Switzerland and Singapore. The US is roughly four times more entrepreneurial than Western Europe and three times more entrepreneurial than Japan.
  • There is a strong correlation between high rates of SuperEntrepreneurship in a country and low tax rates and a low regulatory burden.
  • Countries with high rates of SuperEntrepreneurship also enjoy a high rate of philanthropy.
  • Countries with an Anglo-Saxon legal tradition also have the highest rates of SuperEntrepreneurship. Their rate of SuperEntrepreneurship is over twice that of those with German legal origins, three times that of countries with Scandinavian legal traditions and five times that of French legal origins.

The authors also find active government and supranational programmes to encourage entrepreneurship – such as the EU’s Lisbon Strategy – largely fail. Yet governments can encourage entrepreneurialism by lowering taxes (particularly capital gains taxes which have a particularly high impact on entrepreneurialism while raising relatively insignificant revenues); by reducing regulations; and by vigorously enforcing property rights.
 
SuperEntrepreneurs tend to be well-educated:

  • Only 16% of US SuperEntrepreneurs lack a college degree, compared to 53% of the self-employed and 54% of salaried workers.
  • SuperEntrepreneurs in the US are five times more likely to hold a PhD degree as the general population.
  • 33% of US SuperEntrepreneurs have degrees from the 14 top US universities, compared to 1% of the general population.

Self-employment ≠ entrepreneurship

High rates of self-employment and innovative entrepreneurship are both important for the economy. Yet they are not synonymous; policy makers should not assume policies which encourage self-employment necessarily promote entrepreneurship.

  • While many successful entrepreneurs started small companies, not all self-employed people are innovative entrepreneurs (in the sense of developing successful new products and services).
  • Thus self-employment is high in countries such as Greece, Turkey, Spain, Portugal and Italy, countries with low rates of innovative entrepreneurship. The US has significantly lower rates of self-employment. The self-employment rate in Silicon Valley is half that of the average of California.

Policy makers should use a definition of entrepreneurship which is based on innovation. This would correspond better with what most policy makers appear to want for their countries: technological progress and economic growth to the benefit of all citizens.

The analysis of the self-made rich suggests the vast amount have gathered their wealth through entrepreneurship, in the process creating wealth for society at large. Many of the self-made billionaires come from humble backgrounds and have gained their wealth through hard work and innovative ideas. This clearly goes against the ideas of Thomas Piketty that entrepreneurial wealth is a societal problem, which should be confronted with "confiscatory tax rates". Such a policy would simply halt much of the development that Superentrepreneurs contribute to.

Modern economies ranked for SuperEntrepreneurs per million inhabitants:

 

Total number of SuperEntrepreneurs 

SuperEntrepreneurs per million inhabitants

Hong Kong

20

2.831

Israel

13

1.788

United States

411

1.338

Switzerland

9

1.229

Singapore

5

1.053

Norway

5

1.039

Ireland

4

0.902

Taiwan

19

0.817

Canada

23

0.684

Australia

14

0.639

United Kingdom

32

0.520

New Zealand

2

0.463

Sweden

4

0.434

Germany

29

0.354

Japan

41

0.321

Spain

14

0.303

Czech Republic

3

0.288

Turkey

20

0.284

Portugal

3

0.282

Greece

3

0.269

Austria

2

0.241

Italy

14

0.234

Poland

8

0.210

Belgium

2

0.186

Netherlands

3

0.179

Korea

6

0.123

France

7

0.112

Mexico

6

0.056

Slovenia

0

0.000

Finland

0

0.000

Slovak Republic

0

0.000

Denmark

0

0.000

Hungary

0

0.000

Hong Kong has the highest rate, of 2.8 SuperEntrepreneurs per million population, followed by Israel with 1.8 and the U.S. with 1.3. The U.K. ranks at 11th place, with 2 SuperEntrepreneurs, or 0.52 per million, per million inhabitants. This can be compared with the EU-15 average of 0.30. 

 

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