The Best Countries to Be an Entrepreneur

A recent study shows the United States is not the best, contrary to popular belief
June 19, 2016 Updated: June 19, 2016

The United States stands out as a land of innovation and opportunity, with Silicon Valley and its legendary tech innovators, and Americans tend to think of themselves as very entrepreneurial. This culture of innovation and business acumen is inherited from inventors such as Henry Ford and Thomas Edison, who changed the world.

But how does the United States stack up against the rest of the world?

A report by Wharton Business School revealed that the top nation for entrepreneurs is not actually the United States—it’s Germany

Marketing professor David Reibstein and his colleagues prepared the report based on a survey conducted with about 16,500 global citizens—a mix of the general population, the business world, and academia.

“Germany grabbed the top spot for perceived readiness for entrepreneurs and also took the overall title of Best Country,” the report stated.

Japan came in second, and the United States was third. In fourth and fifth place were the U.K. and Canada, respectively.

These five countries were named as “well-established economies that have the resources to support new endeavors, both legally and financially.”

The top 10—which includes Sweden, the Netherlands, Australia, Singapore, and Denmark—together account for 31 percent of the world’s Gross Domestic Product (GDP).

Germany earned top scores notably in infrastructure and educated population.

Germany earned top scores notably in infrastructure and educated population. The country has long been friendly to small-and-medium-sized enterprises, the so-called ‘Mittelstand.’

“Since Chancellor Angela Merkel’s election in 2005 both the public and private sectors have focused more on innovative technologies and web-based enterprises. For example, Berlin is now home to ‘Silicon Allee’ with hundreds of new startups,” said the report.

Japan was perceived as entrepreneurial enough to earn second place, which was one of the surprising outcomes of the survey, according to the authors.

Japan’s advanced robotics industry likely contributed to the perception of innovation and entrepreneurship.

The United States is often viewed as a consuming nation rather than a creating nation.
— David Reibstein, Wharton Business School

The United States scored top in several entrepreneurial attributes, including easy access to capital—however, it had mediocre scores in transparent business practices and skilled labor force.

Reibstein believes the perception about labor force stems from the widely reported lackluster performance of American students in math and science.

“When many people think of America’s contributions to the world, what may be more likely to pop into their minds is McDonald’s, Starbucks, or Coca-Cola. Or perhaps Hollywood movies. None of these are closely associated with entrepreneurship internationally,” said Reibstein.

“I think the United States is often viewed as a consuming nation rather than a creating nation.”

Entrepreneurship has a high correlation with economic returns.

A country’s readiness for entrepreneurs is measured on several attributes, including its connection to the rest of the world, educated population, innovation, easy access to capital, skilled labor force, technological expertise, transparent business practice, infrastructure, and legal framework.

The study also reveals that entrepreneurship has a high correlation with economic returns—particularly with direct foreign investment and exports.

“The products coming out of countries—that are known to come out of those countries—help contribute to the perception of that country as innovative. And the more we tend to think of these countries as innovative based on their products, the more we want to invest in their businesses and buy products from them,” said David Reibstein.

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