So, why exactly do we need entrepreneurs? Well… From an economic standpoint, entrepreneurs are a powerful engine of sustained economic growth, wealth creation, an increased output of goods and services, and the creation of jobs. Since 1980 entrepreneurs have added over 34 million jobs worldwide. Most importantly, however, entrepreneurs are part of a continual process called creative destruction. By creating new dynamic companies, entrepreneurs clear out old stagnant companies thus spurring competitiveness, growth and innovation. In fact, according to the Ewing Kauffman Foundation for Entrepreneurship, 2/3 of all inventions and 95% of all radical inventions since WW2 have come from entrepreneurs. Now I want you to think about that for a moment. The next time you surf the Internet, call someone on your iPhone, read 1984 on your Kindle, drive your car, or use electric light, remember it’s because of an entrepreneur. Entrepreneurs have changed the way we live.
Every year, Fortune magazine ranks the top 500 corporations worldwide by revenue in the Global 500. As of today, Canada ranks tenth with a total of eleven companies. Sounds pretty good, right? Wrong, because we’re asking the wrong question. We shouldn’t care about how many Canadian companies are listed as much as when they were born – and what you will find is a startling reality. Between 1950 and the latest Global 500 rankings, America gave birth to 52 new big companies currently listed in the Global 500. In the same period, Canada has only produced one: Onex Corporation, a Toronto based private equity firm, and it was born in 1983. Not too encouraging anymore, now is it?
But, our problem with entrepreneurship extends beyond the Global 500 rankings. In 2011, the Conference Board of Canada ranked Canada 14th out of 17 peer countries in its capacity to innovate and gave it a D – almost a failing grade. Canadian entrepreneurs are responsible for driving innovation, and their current struggles are transcending into key areas of Canadian life. In 2012, Canada ranked 17th out of 34 OECD countries in productivity and Canadian business-sector productivity has fallen to 75% of the US. Simply put, Canadian productivity is just awful. As a result, we have fallen two places down to 14th in the World Economic Forum’s latest global economic competitiveness ranking. If Canada wants to sustain its high living standards, it will need to boost historically low productivity growth by tapping the innovative potential of entrepreneurs. While many other countries lack the economic opportunities, institutions and infrastructure needed for entrepreneurs to flourish, Canada faces a very different problem: fostering an entrepreneurial culture.