America: An Economic Incubator for Entrepreneurs

The IMD World Competitiveness Yearbook (WCY) analyzes and ranks nations' ability to create and maintain environments to sustain the competitiveness of enterprises. Considered the global authority on world competitiveness, it has been published annually since 1989 and ranks 55 economies on 323 criteria.

Results for 2007 were released in May, here is the press release, see the top 25 countries in the chart above (click to enlarge). As usual, the U.S. ranks #1 as the most competitive economy in the world, followed by Singapore and Hong Kong.

Why is the U.S. economy the most competitive in the world? And a related question: why has America produced so many successful young entrepreneurs? George Mason economist Tyler Cowen offers some excellent insights in this recent NY Times article:

1. American youths are so successful at entrepreneurship in part because so many older and wealthier people are willing to help them. The broader American success at philanthropy, then, lays the groundwork for American entrepreneurship. By global standards, Americans may have looser networks of friends and family, but Americans are more willing to help relative strangers, and this often helps business.

2. The fact that American schooling is less disciplined than that in other countries gives young creators the time and the energy to accomplish something outside their formal education.

3. Relatively loose family structures have similar effects; American children are especially likely to be working on their own projects, rather than being directed by parents and elders.

4. Compared with those in other countries, American children play a much more influential role in society and enjoy a remarkable degree of autonomy. Teenagers receive higher allowances, have greater access to credit cards, and have more money to spend on starting a business. American labor markets are flexible enough to create a large number of jobs at the lower end of the wage scale. Teenagers are more likely to acquire work experience, and they are more likely to earn a small amount of capital for financing a start-up enterprise.

5. It is a common American dream to want to start one’s own business, and this cultural influence spreads to the young.

Tyler concludes, "On a national level, these successes are rooted in the commercial, competitive, philanthropic, nonegalitarian and open nature of American society. America’s economic head start probably won’t go away anytime soon."

MP: In other words, America's competitiveness results from an entrepreneurial-friendly society and culture, along with efficient and well-developed financial and credit markets, and generous philanthropic traditions, that together create an incredible infrastructure that nurtures and supports young entrepreneurs more successfully than any place on the planet - like an "economic incubator" for entrepreneurs. Imagine if a Bill Gates or a Michael Dell had been born in any other country - they might not have had the same supportive environment to nurture their entrepreneurial talents as they did here to start Microsoft and Dell, without any inherited wealth and without any political connections?