US ecosystem breeds innovators

Since the end of the Great Recession in 2009, the US has not only enjoyed a steady economic recovery, it has also improved on many key measures that drive future prosperity. That fact is reflected in its position on the Global Competitiveness Index. The US went from third to second in 2017, coming in just behind Switzerland.

The main reason for this progress is that Americans have maintained a “vibrant innovation ecosystem” that helps improve worker productivity, according to the World Economic Forum, which publishes the Global Competitiveness Report with country rankings.

Just how to maintain that vibrancy is the background for many debates about the US economy. How should Congress reform taxes? Which cities will win Amazon’s second headquarters? Amid such debates, it is easy to forget the underlying strengths of the US economy. It is No 1 in how it finances entrepreneurs. It has the world’s most sophisticated consumers. And it ranks second in its capacity for research and its availability of scientists and engineers.

Economists like to chart whether a nation’s culture, or its system of values, has a certain “tightness” that discourages risk-taking. American culture is rather “loose” in being open to go-getters. A survey in May found that half of millennials in the US plan to start a business in the next three years. And according to The Economist magazine, a forthcoming report from the Kauffman Foundation finds that “high-growth entrepreneurship has rebounded in America from the trough induced by the global financial crisis”.

Countries that have grown the most since the world financial crisis a decade ago have largely done so by removing barriers for entrepreneurs. Those nations with a vibrant “ecosystem” for innovation have the most to offer entrepreneurs. They also have the most to gain in global competitiveness. Boston, October 3.