Not So Fast: The Myth of U.S. Entrepreneurship

The United State is the venture-capital capital of the world, but start-ups and young small businesses play a lesser role in America’s economy than in many other rich nations.

America’s entrepreneurial streak as one of the things that, theoretically, is supposed to make us exceptional as a country. At least it is if you listen to most politicians. But how do we actually stack up with rest of the world when it comes to building our own businesses?

We are, in fact, pretty unexceptional.

Entrepreneurship is still a bit of a blurry area of economic research, and (as you’ll soon see) using different standards to measure it can yield radically different results. But one popular approach among economists is to count how many new businesses with paid employees start up each year, then divide them by the number of companies that are already up and running. The Organization for Economic Cooperation and Development, an international research outfit that specializes in side-by-side comparisons between different economies, calls this percentage the “employer enterprise birth rate.” Others just call it the start-up rate. But whatever you name the measure, the United States scores fairly low on it. We’re second to last, for instance, on the OECD graph below, which looks at the years 2007 through 2009.

But hey, at least we beat Canada.


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Source: Jordan Weissmann | The Atlantic
Image: Organization for Economic Cooperation and Development