A study of the world’s 1000 richest self-made men and women has laid out the perfect conditions to become a “super-entrepreneur”.
Countries with low tax rates, minimal regulation, excellent academic institutions and an Anglo-Saxon legal system are best placed to create billionaires, according to the study, published today by the Centre for Policy Studies.
With about three super-entrepreneurs per one million inhabitants, Hong Kong is the most billionaire-friendly place on earth, followed by Israel, the US, Switzerland and Singapore. The US is roughly four times more entrepreneurial than western Europe and three times more entrepreneurial than Japan, the study found.
Despite its reputation as a nation of investors, Britain is placed only 11th in the league table, lagging behind Australia but ahead of France and Germany.
The UK boasts 32 super-entrepreneurs, who are defined as having earned at least dollars 1 billion (pounds 600 million) and having appeared in Forbes magazine’s list of the world’s richest people between 1996 and 2010.
Many of Britain’s richest are either foreigners, such as Alisher Usmanov, who came to the country six years ago, or heirs to fortunes, such as the Duke of Westminster, the property magnate.
Self-made entrepreneurs also flourish, as Sir Philip Green, the man behind Topshop, and Sir Richard Branson show. “Britain is one of the best countries in Europe,” Tino Sanandaji, the report’s co-author, said. “Some countries, like France, the rich have mainly inherited wealth, but in Britain a high percentage of your wealthy are self-made.
“It’s partially explained by the low tax rates and London’s place as a financial centre, but having centres of knowledge such as Oxford and Cambridge universities is also very important.”
The study found that super-entrepreneurs tended to be “well educated and exceptionally bright”. Only 16 per cent of US billionaire entrepreneurs lack a college degree, the study found, compared with 54 per cent of self-employed or salaried workers. US super-entrepreneurs were five times more likely to hold a PhD than other people.
Super-entrepreneurs have created thousands of jobs and wealth for people other than themselves, the study says. It also found that 31 out of the largest 100 US public companies were founded after the Second World War, compared with seven of Europe’s top 100 firms.
“This type of entrepreneurial wealth can be socially valuable,” Mr Sanandaji said. “Of course, some of these billionaires are from hedge funds, but finance only comprises 2 or 3 per cent of the list.
“It might not be the right time to lower tax rates,” he added, “but one of the other ways countries such as Britain could stimulate entrepreneurship without increasing inequality is to promote its elite universities.”
Mr Sanandaji said: “Britain has the potential to be very competitive in the tech industry, you have all the requirements. But ‘frontier knowledge’ is very important. There’s a strong correlation between entrepreneurial success and a country which publishes a lot of scientific papers.”