Betting on Entrepreneurial Growth
Cities and states focused on attracting big box stores and corporate behemoths like Dell Computers are going about it all wrong. If they want to promote sustainable economic growth, they need to bet on age instead of size -- putting their energies into cultivating an environment conducive to new, entrepreneurial startups.
That is an increasingly common viewpoint and one that is argued quite effectively by Vivek Wadhwa in a recent TechCrunch article. An entrepreneur and academic with ties to UC Berkeley, Harvard and Duke, Wadhwa points to recent research from Tim Kane of the Kauffman Foundation (who has his own incredible blog at Growthology.org) showing that "existing companies were net job destroyers, losing 1 million net jobs per year" and that "new businesses in their first year added an average of 3 million jobs annually."
The piece is a rallying cry to recognize the economic contributions of new firms, abandon the more traditional approach of regional economic development, and to embrace entrepreneurs. Wadhwa suggests providing entrepreneurs with "incentives (tax breaks and seed financing); education; and infrastructure" as well as targeting public policy at all levels toward startups. The last point is an important one as there are a range of policy areas that impact entrepreneurial growth -- ranging from immigration and education to tax structures, patent-protection and regulatory reform.