New Digest – Innovation and Entrepreneurship: The Right Combination for Growth?
October 24, 2011 1 Comment
On October 7, 2011, Wilson Center on the Hill hosted an event titled, “Innovation and Entrepreneurship: The Right Choice for Growth?” Three panelists, Amy Wilkinson, Philip Auerswald, and Brink Lindsey, along with moderator Kent Hughes, addressed the importance of innovation and entrepreneurship in creating economic growth.
Brink Lindsey, a senior scholar at the Ewing Marion Kauffman Foundation, proposed solutions to the issue of “structural doom and gloom” often brought up by economists. Lindsey argued that unemployment and concerns regarding innovation are problems that can be solved through effective entrepreneurship. He contended that jobs come from startup firms, and from 1997-2005 these firms were the only source of net new jobs. The barriers to entry for new firms need to be eliminated, he noted, and road blocks to growth must be identified.
Lindsey summarized the proposed Start-Up Act as a path out of the recession and to renewed prosperity. In particular, he emphasized three elements of the Act: establishing an “entrepreneur” visa, implementing tax advantages for start-up firms, and increased access to capital markets. Immigration was an especially crucial issue, Lindsey argued, as students who come to the U.S. from abroad to study STEM subjects often find it too difficult to stay. Today’s innovative companies have a large international workforce, and immigrants are an important asset to the U.S. economy. Lindsey also encouraged a balance between regulatory costs and regulation, while noting that regulation is most efficient at the local level. He urged the United States to consider using the World Bank’s model for regulation, which focuses on states and localities. Lindsey concluded by arguing that the U.S. needs “well-structured rules that allow creative and innovate people to be creative and innovative.”
Amy Wilkinson, a Public Policy Scholar at the Woodrow Wilson Center and Senior Fellow at the Center for Business and Government at Harvard University, sought to answer the question, “Who are high impact entrepreneurs?” Wilkinson, like Lindsey, addressed the importance of foreign talent and the need for more immigrant visas. She argued that immigrants who earn college diplomas in STEM fields should be automatically granted a green card to conduct research and build businesses in the United States. Additionally, she thought that entrepreneurship curricula should be strengthened in high schools as well as universities through programs such as the Network for Teaching Entrepreneurship (NFTE) and FIRST Robotics.
Wilkinson then stressed the importance of women entrepreneurs, as data suggests that women are not funded as well as men in entrepreneurial settings. As a whole, Wilkinson cited statistics showing that businesswomen have higher returns on capital than men, suggesting that investing in women should be a priority.
Lastly, Wilkinson mentioned that entrepreneurs “need to be willing to fail 10% of the time.” She argued that failure is important for pushing boundaries. She noted that this is an innate concept for innovators in Silicon Valley, but Washington has not yet accepted this idea.
Philip Auerswald, an Associate Professor at George Mason University and Senior Fellow at the Kauffman Foundation, began his discussion with an analogy treating the economy as a forest. A forest grows because small trees grow into large trees, incorporating other smaller plants and minerals as it t grows. These small trees are hindered by giant trees stuck in place, that block all the sunlight from the rest of the forest. An economy is similarly propelled forward by small businesses that foster creative jobs and stir innovation, but which can be blocked by giant corporations and regulations favored by established firms that create barriers to entry for entrepreneurs.
Instead of dwelling on measures such as GDP, jobs, or economic growth, Auerswald argued that the national conversation should focus on innovation and entrepreneurship and their role in defining the future of the United States in the 21st century. He anticipated questions about outsourcing and offshoring but contended that currently-offshored jobs will return to the United States as wages rise in developing countries.
Auerswald did propose a number of solutions however. First, he urged the U.S. to steer its efforts towards “collaborative capital” while “embracing new Americans.” Restructuring school curricula to meet the demands of the workforce is also a necessity. Referring to the entrepreneurship and innovation – focus of the panel — Auerswald commented, “there is no more important cause in the United States of America.”
Posted by: Rebecca Anderson
Kent Hughes, Director, Wilson Center on the Hill
Photo courtesy: David Hawxhurst/Woodrow Wilson Center