“The U.S. is going to have its lunch eaten if it doesn’t wake up soon.”
That was the blunt assessment of one participant in the 2022 Global Entrepreneurship Congress (GEC), which took place at the end of March in Riyadh, Saudi Arabia. The GEC annually brings together entrepreneurs, investors, startup programs, entrepreneurship organizations, policymakers, and more from nearly 200 countries. This was the first in-person GEC since 2019.
The participant quoted above was responding specifically to the Ministerial session, during which senior policymakers from several dozen countries discussed what their governments were doing to support entrepreneurs. As the observation indicates, this year’s GEC was a good place for considering the United States’ place not only in the world economy but also in the realm of global innovation. This is also on the minds of American lawmakers as the U.S. House and Senate move into a formal legislative conference on two major pieces of legislation that purport to boost U.S. competitiveness and innovation.
Three takeaways from the 2022 GEC should be kept in mind by U.S. policymakers as they seek to resolve legislative differences and get a final competitiveness bill to the president’s desk.
Entrepreneurs are Everywhere
And they’re doing amazing things.
Words like “entrepreneur” and “startup” often get closely associated with locations such as Silicon Valley and Kendall Square. In the 2021 Global Startup Ecosystem Report from Startup Genome, U.S. regions held five of the top 10 spots in overall ecosystem rankings. The United States, however, does not have a monopoly on startups. Rarely does discussion of entrepreneurship call to popular mind places like Uzbekistan or Bangladesh—but entrepreneurs are there.
A small sampling of startups at the GEC found entrepreneurs working on soil re-naturalization with bacteria; SMS-based education modules; executive search using artificial intelligence; and non-fungible tokens for, well, everything. The United States used to be a priority destination for entrepreneurs from around the world. Now, more of them are staying put to help address challenges and take advantage of opportunities in their home countries.
Governments are Doing a Lot to Support Entrepreneurship
There is considerable debate over the proper role of government in helping, or at least not hindering, entrepreneurs. For some, government should be active, putting money into public venture funds and supporting all manner of business assistance programs. For others, government’s best role is to keep barriers to market entry low and fund basic research that entrepreneurs can commercialize.
Irrespective of their philosophical starting points, it’s clear from GEC that more and more governments are determined to cultivate vibrant entrepreneurial environments. In some countries, it’s an existential matter. The host nation, Saudi Arabia, has been pouring billions into supporting entrepreneurs in an attempt to diversify away from oil. To the north, Iraq faces the same situation. At the Ministerial, a senior government official said that 95% of the Iraqi government’s revenues currently come from oil. Supporting entrepreneurs is an economic survival strategy.
Elsewhere, entrepreneurship support is a means for economic reinvigoration. European governments have long fretted about the continent’s inability to produce a new generation of tech companies comparable to those in the United States. Today, a growing list of “unicorns” (startups with billion-dollar valuations) is giving Europe greater economic optimism. In countries such as Brazil, public policies like the Startup Act are part of a continuing effort to roll back decades of heavy-handed state regulation and economic planning.
Entrepreneurship is Central to National Economic Competitiveness
This sounds obvious—but it’s not. Support for an entrepreneurial economy has never been universal, with critics decrying wasteful use of resources and espousing the virtues of big business. Large technology companies have been warning Congress and the Federal Trade Commission to back off antitrust enforcement lest it undermine American competitiveness with China.
Even the most ardent entrepreneurship champions wouldn’t deny that big companies are essential to economic competitiveness. For many startups and their investors, after all, acquisition by Meta or Alphabet is a sought-after outcome.
Yet a balance is needed. The American economy needs large world-leading corporate champions as well as dynamic churn that continuously challenges those champions. Federal legislators need to take care that their desire for global competitiveness doesn’t come at the expense of domestic competition.
In June 2021, the Senate passed the United States Innovation and Competition Act (USICA) by a healthy bipartisan margin. In February 2022, the House passed the more partisan America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (COMPETES) Act. Both bills are rooted in the same fears: that the United States is in danger of ceding technological leadership to China, that America’s collective capacity for innovation is waning, and that these trends threaten national security and domestic prosperity.
Principal goals of USICA and COMPETES include more entrepreneurship and innovation in more parts of the country, particularly in frontier technology areas such as artificial intelligence, energy, and quantum computing. Small businesses and entrepreneurs will be key to accomplishing those aims. Both bills include ways to enhance commercialization, attract the talent that entrepreneurial firms need, and ensure that innovation is happening in more than just a handful of regions.
The United States has long been the world’s leading example of entrepreneurial capitalism. It still is: new business creation has surged since mid-2020 and venture capital investing continues to shatter records. Yet an overarching takeaway from this year’s GEC is that many other countries are seeking to reanimate their economies through greater support for entrepreneurship. Startup activity in China, for example, has been strong and VC investing there has also hit new highs in the last few years.
American policymakers can’t ignore this global context. Our ability to remain competitive and at the global frontier of innovation depends on finding new and better ways to support entrepreneurs.
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