Entrepreneurship in the twenty-first century

Plain English Summary In the twenty-first century, we have witnessed a sharp decline in the number of new startups in the USA across all sectors, including those sectors considered high-tech and innovative. The reason why this has occurred is still open for discussion and debate. This development is worrying as new startups contribute disproportionately to job creation, innovation, and productivity growth. Alongside this, the global pandemic has brought about a massive reduction in economic activity and its restructuring. At the same time, there has been a distinct increase in applications for new businesses, especially in industries that facilitate remote interactions between businesses and consumers and businesses and workers. It is an open question whether this reverses the long-run trend of declining entrepreneurship that the USA has been experiencing or if this has only brought about a temporary change. There will be plenty of opportunities for future research to disentangle the reasons for and persistence in the business dynamics seen in US data. Employer business startups contribute disproportionately to job creation, innovation, and productivity growth. This contribution is dynamic and complex involving much trial and error. Most startups fail or do not grow but a small fraction grow rapidly contributing substantially to economic performance. In the USA, there has been a decline in startup rate and the share of activity accounted for by young firms over the last couple of decades. This decline has accelerated and become pervasive in the post-2000 period even in innovative-intensive sectors. The flip side of this change is an accompanying increase in the share of activity accounted for by mega (10,000 +) firms in the post-2000 period. While both benign and adverse factors may underlie these structural changes, the post-2000 period has also exhibited a decline in productivity growth along with indicators of business dynamism. The global pandemic has had a major adverse impact on health, morbidity, daily life, and economic activity. However, there has been a surge in new business applications that may signal a turning point in entrepreneurial activity.

Automated summary

In the 21st century, there has been a sharp decline in the number of new startups in various sectors in the USA, with the reason still open for debate. New startups play a significant role in job creation, innovation, and productivity growth. The global pandemic has reduced economic activity but also led to a surge in new business applications, potentially signaling a turning point in entrepreneurial activity.