Entrepeneurship

Before I forgot about it I wanted to make a brief comment on Arnold Kling’s recent TCS article on entrepeneurship. He starts by defining his terms in a way I generally agree with: an entrepeneur is one who assumes risk in starting a new enterprise. He then cites as an example the pharmaceutical industry in the United States, comparing it favorably to the pharmaceutical industry in Europe. Apparently, despite larger EU pharmaceutical research and development, U. S. pharmaceutical companies produced more new medicines and 1,680 more new research jobs.

And that’s where I became puzzled. Is the correct conclusion to draw from this that a superior environment for entrepeneurship exists in the U. S. compared to the EU or that the significantly more robust regime of intellectual property in the U. S. relative to that in the EU motivates companies to produce more pharmaceutical patents? And, perhaps, that one might expect U. S. companies to invest more in R & D than they do (a point I’ve made here from time to time)?

5 comments… add one
  • Better entrepreneurship environment, for a lot of reasons – nothing stunning but a cumulation of small disadvantages that individually do not seem all that bad, but collectively are a real brake.

    In addition to the doors being perhaps not utterly closed to immigrant boot-strap entrepreneurs (I excude those who come in w capital), at least being generally shut.

    The US does have a special brilliance there.

    Among the reasons I wish the US would stop it’s impoverished “Democracy” promo in the political sphere and start concentrating on Economic democracy promo in MENA. You’d win there, absolutely win. But its a long term strategy, not something that shows fruits in 6 months.

  • That’s a good observation, Lounsbury. I, too, don’t believe there’s any grand difference but an array of small ones. I also think Americans have a greater tolerance for what Tyler Cowen has been calling “turbulence” which I take to be related to Spengler’s “creative destruction”.

    IMO politicians everywhere are peculiarly incapable of seeing their own countries actual competitive advantages (or weaknesses). The Bush Administration, of course, has a peculiar genius for miscalculation.

  • The last phrase is very good. A peculiar genuis for miscalculation.

    The issue I see is the political people I run into out in this region seem to want to see results on any bloody thing in six months (One Friedman), rather than taking a more rational view of years. Political budgeting driven of course.

  • Indeed. I’ve posted about my own experience with short-sighted thinking, recounting an anecdote about a conversation I had with the guy I reported to at the time about the implications of some commitments he’d made for the next year. His response was that if he thought that far ahead there’d be some other guy in his seat thinking one quarter ahead. When you’ve got to show results on a quarterly basis you plan on a quarterly basis.

  • Indeed. I am dead set againts short-term reporting. It leads to under investment (ceteris paribus).

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