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American Entrepreneurship - 5/23/14

Americans cannot be blamed for considering their nation highly entrepreneurial.  After all, this is the country that produced social media giants like Facebook, Twitter and LinkedIN in recent years and many more companies beyond those.  But a new study supplied by the Brookings Institution concludes that the U.S. economy is less entrepreneurial now than it has been at any point during the past 3 decades. 

Moreover, during the most recent 3 years of the study, 2009, 2010, and 2011, businesses in America were collapsing at a more rapid rate than they were being formed – that’s a first.  As reported in the Washington Post, overall, new business creation, which for these purposes is measured as the share of all businesses less than 1 year old, declined by about half between 1978 and 2011.  

The Brookings authors clearly state the implications of slower business formation – if the decline persists, America is in for a period of slow economic growth for the indefinite future.  While all states registered large declines in new firms, New York’s decline was less profound than in other states, perhaps because of a large immigrant population with a propensity toward entrepreneurship.
 

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.