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U.S. Remains Dominant Force in Global Entrepreneurship... For Now


Uncle Sam is leading the pack in the global entrepreneurship race, but he had better not break stride.

The U.S. is home to one of the "most favorable entrepreneurial environments" in the world, according to an assessment by Ernst & Young of the 20 leading global economies. The claim was immediately qualified, however: "This is not to suggest that there is any margin for complacency."

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Here's a look at what makes the U.S. a leading force for entrepreneurship and the areas in which it needs to improve if it wants to remain out front, according to Ernst & Young's research.


Entrepreneurship culture. Silicon Valley is a beacon for entrepreneurship across the globe and many other nations have looked to build their own version of the California innovation hub. But even throughout the U.S., a culture of entrepreneurship is "part and parcel of the country's DNA," the report finds.

Strong and recovering financial markets. From a robust venture capital community to angel investors, special banks and a developing crowdfunding market, the availability of capital for entrepreneurs in the U.S. is relatively strong compared to other G20 nations.

Innovation leader. The only nation in the G20 that leads the U.S. in innovation is Japan, according to Ernst & Young. The U.S. dominance in this category is largely due to its network of universities and research institutions.

Environmental technology innovation leader. The U.S.'s ability to transform ideas into products for sale in the biotech sector surpasses that of other countries, the report says.

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U.S. Small Business Administration. As part of the Startup America initiative, the SBA has a number of efforts targeted at entrepreneurship. In particular, the SBA has $2 billion to devote to mentorship and incubation programs as part of the program.


Corporate tax rate is the highest in the G20. In addition to the high overall topline tax rate, the potential expiration of the Section 179 tax break at the end of this year has the potential to hit small-business owners especially hard. The expensing tax break is set to plunge to $25,000 from $500,000.

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Sentiment about support community in the U.S. is falling. While the number of communities of mentorship and incubators available for entrepreneurs in the U.S. is not especially low compared to other nations, what the report found is that U.S. entrepreneurs reported more weakening in the past few years than any other G20 nation.

Startup rate still behind where it was pre-recession. The rate of new startups slowed in the first six months of 2012 after very nearly returning to pre-recession levels in 2011.

Science and mathematics education lags other countries in the G20. Even while parts of the U.S. university system drive innovation, there are many weak links in the higher-education system. Also, the cost of attending college is prohibitive for many people in the U.S., which, the Ernst & Young report says, limits the development of potential startup talent.

U.S. government budget cuts threaten R&D programs. As Washington looks to decrease the deficit, there is some worry that entrepreneurial business support programs and allocation to research and development funds will take a hit, negatively impacting the entrepreneurship community in the U.S.

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