Embracing Innovation: Entrepreneurship and American Economic Growth

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NATIONAL COMMISSION ON ENTREPRENEURSHIP WHITE PAPER EMBRACING INNOVATION: ENTREPRENEURSHIP AND AMERICAN ECONOMIC GROWTH America’s booming entrepreneurial sector is responsible for much of today’s economic prosperity. Entrepreneurs take advantage of new wealth-creating opportunities that arise daily from constant change. This phenomenon – creating opportunity from change -- has been part of the American culture since the 19th century Industrial Revolution. Today, an entrepreneurial renaissance is transforming American business and society. And its very success creates new challenges and opportunities for American policymakers. This white paper describes the role of entrepreneurs in sparking and expanding our current economic boom. If one were to pick a word that summarizes what entrepreneurs do, “innovation” would fit the bill. Entrepreneurs’ embrace of innovation has concrete benefits for our national bottom line: 4 4 4 4 Entrepreneurs use innovations to improve our quality of life. Entrepreneurs create new jobs. Entrepreneurs improve our position in global economic competition. Entrepreneurs create economic growth and new wealth for reinvestment in our country. As we note below, the spillover benefits of these activities are profound. Because of their embrace of innovation, entrepreneurs help lift all parts of the American economy. WHAT DO ENTREPRENEURS DO? Above all, entrepreneurs see opportunity in ever-accelerating global change. The communications sector provides a perfect example of the dizzying pace of change. Radio took 38 years to reach 50 million listeners; it will take the Internet just five years to reach 50 million users. Or take change in financial services industry.1 The Charles Schwab Corporation took 20 years to accumulate its first $100 million in assets; it accumulated its second $100 million in only seven months.2 The changes leading to
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