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SuperEntrepreneurs – and how your country can get them

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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.

Timo, Nima Sanandaji - Monday, 28th April, 2014

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