The US is Losing its Enterpreneurial Mojo

That’s the implication of a new study by Ian Hathaway and Robert Litan published by the Brookings Institution.  According to the authors, the outlook isn’t brilliant, to say the least:

 Overall, the message here is clear. Business dynamism and entrepreneurship are experiencing a troubling secular decline in the United States. Existing research and a cursory review of broad data aggregates show that the decline in dynamism hasn’t been isolated to particular industrial sectors and firm sizes. Here we demonstrated that the decline in entrepreneurship and business dynamism has been nearly universal geographically the last three decades—reaching all fifty states and all but a few metropolitan areas.

Their analysis shows a decline in enterpreneurial/start-up activity that is becoming more uniform across all geographies and all sectors. Blogger Kevin Drum isn’t so sure about their findings:

The last few decades have seen an explosion among national chains and big box retailers, and it only makes sense that this has driven down the number of new entrants in these sectors. When there’s a McDonalds and a Burger King on every corner, there’s just less room for people to open up their own lunch spots. But if there’s been a decline in the number of new small retailers, that may or may not say anything about the dynamism of the American economy. It just tells us what we already know: national chains, with their marketing efficiencies and highly efficient logistics, have taken over the retail sector. Amazon and other internet retailers are only hastening this trend.

You can read the full Brookings report here.

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