Working Paper Series
Schumpeterian Entrepreneurship in Europe Compared to Other Industrialized Regions
() and Tino Sanandaji
Abstract: We examine whether Europe has an “entrepreneurship
deficit” compared to other industrialized regions. Cross-country
comparisons are difficult due to the lack of standard empirical definitions
of entrepreneurship. Measures focusing on small business activity and
startup rates suggest that Europe has the same or higher rates of
entrepreneurship than the U.S. and East Asia. However, most business
activity is not entrepreneurial in the Schumpeterian sense. We rely on
empirical measures that more closely tally Schumpeterian entrepreneurship.
These include top global firms founded in recent decades, highly valued
unicorn startups, venture capital investments as a share of GDP, and the
number of self-made dollar billionaires per capita who earned their wealth
by creating new firms. Western Europe is shown to underperform in all four
measures of high-impact Schumpeterian entrepreneurship relative to the U.S.
Once we account for Europe’s strong performance in technological
innovation, an “entrepreneurship deficit” relative to China and East Asia
becomes apparent. This underperformance is missed by most standard
measures, but captured by the GEM measure China is found to perform
surprisingly well in Schumpeterian entrepreneurship, especially compared to
Keywords: Billionaire entrepreneurs; Entrepreneurship; Innovation; Institutions; Regulation; Self-employment; (follow links to similar papers)
JEL-Codes: L50; M13; O31; P14; (follow links to similar papers)
31 pages, May 16, 2017
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