Innovation is the lifeblood of every economy. While many nations have unfortunately relied heavily on natural resources to grow their economies (Venezuela, Russia, Saudi Arabia etc.), my homeland no exception (Canada), it is the resourcefulness of the citizenry that countries should rely on to create strong economies. And resourcefulness and productivity are direct results of creating an innovative culture within a nation.
Innovative environments attract entrepreneurs because like-minded folks want to be around each other, feeding off the energy – hence the migration of innovators to regions such as Silicon Valley, Vancouver, Berlin, Boulder, and London.
This week Bloomberg released its annual list of the world’s most innovative countries. And the same group continually appear at the top. Not coincidentally, every one of these countries produces little to no natural resources. By necessity, in order to compete economically on a global scale, they must be innovative and resourceful. Necessity is the mother of all invention, after all…
Top 5 Most Innovative Countries
In this order, South Korea, Germany, Sweden, Japan and Switzerland comprise the top five innovative countries in the world. The United States is 8th, stuck between Finland and Denmark, while Canada sits in a rather disappointing 19th.
According to a KPMG report, these innovative countries have varying corporate tax rates, yet all are lower than the United States:
- South Korea: 24.2%
- Germany: 29.65%
- Sweden: 22%
- Japan: 33.06%
- Switzerland: 17.92%
Japan ranked as the most active for patents, followed by South Korea and Germany. Israel, not surprisingly, ranked best in the world for ‘R&D Intensity’ and ‘Researcher Concentration’. It’s no wonder it has become such a hotbed for medtech, biotech and water treatment technology. Israel is a brain bank. When a nation supports its R&D community with attractive tax rates, grants and collaborations with domestic Universities, it makes it extremely attractive for startup entrepreneurs in need of intellectual talent. The bigger that talent pool, the more fruitful the innovation pipeline will be.
Not surprisingly, given the swath of amazing tech entrepreneurs in Silicon Valley and Boulder, the United States ranked number one in ‘High Tech Density’ – making it an ideal nation to raise venture capital for tech startups.
To my surprise, Japan, South Korea and Germany didn’t even crack the top 20 for ‘Productivity’. Norway took top spot in that category, followed by Australia and Switzerland. This stat shows that, cumulatively, the talent pool of workers and the incorporation of technology in the workplace is best in these three nations – an important tidbit for global investors and entrepreneurs.
Best Countries for Entrepreneurs
The most entrepreneur-friendly country to start a business is Switzerland, followed by the United States and Ireland. My criteria for selection is based on these key parameters:
- Startup and investment infrastructure
- Tax rates (both corporate and personal)
- Talent pool
- Access to global markets
- Innovation & productivity
- Respectability (Address matters! How is it viewed by the world from a business perspective.)
So there you have it. While innovation is critically important, it isn’t the deciding factor in what makes a country the most entrepreneur-friendly. Infrastructure, tax rates, productivity and global market accessibility also play a major role in making a country ideal for entrepreneurs. Hopefully governments will understand this before planning their budgets this year.
P.S. If you’re an entrepreneur, or an aspiring one, stop getting your information from journalists who’ve never ran a successful business. Get it from someone who has successfully walked the entrepreneurial walk. Get it from me by signing up to my weekly newsletter below…