Mapped: America’s Entrepreneurial Spirit During COVID-19

Despite the risks of opening a business during a global pandemic, new data from the U.S. Census Bureau reveals that the entrepreneurial spirit is alive and well in the United States.

In total, there were 492,133 new business applications in January 2021—an increase of over 73% year-over-year (YoY).

The region with the highest growth rate was the South at 84% with more than 220,000 new business applications in the region in January of this year. Mississippi had the highest percent increase at 164%, with over 6,000 new applications in January 2021.

Here’s a closer look at the number of total applications by state and region:

Notably, new business applications have soared in the last month or so, bouncing back from a dip between July and December 2020.

The growth rate from December 2020 to January 2021 stood at 42.6%, with the biggest change happening in the Midwest, where applications have gone up 48.6%. Here’s a look at the biggest changes in applications by region since December 2020:

Note: Business applications are measured by collecting data on new applications for Employer Identification Numbers with the U.S. government.

Opportunity Out of Crisis

Prior to the pandemic, new business startups were actually on the decline, but in times of crisis there is often opportunity.

People have become wildly innovative during COVID-19, partly because they were forced to do so due to job or income loss. Economists call this ‘creative destruction,’ wherein new innovation springs up because of the failure of particular industries or businesses.

Here’s a look at new business applications by industry.

Creative destruction has been keenly exemplified in the rise of remote and digital services over traditional brick and mortar stores. In fact, the industry with the highest number of new business applications in January 2021 was retail services, mostly online, with over 101,000 applications.

Feeling the Entrepreneurial Spirit?

As business applications are on the rise, more jobs could potentially be created in the U.S., and competition will likely increase as well. While starting a business during COVID-19 is risky, it could have immense payoffs for the individuals involved and the overall economy.

In fact, a piece from the U.S. Chamber of Commerce actually recommends specific business ideas that are ‘pandemic-friendly.’ Among many virtually-based ideas, the list includes:

• Digital marketing
• App development
• Fitness and wellness services
• Box subscription services

Perhaps, for digitally minded entrepreneurs, there has never been a better time to start a business.

The Most Innovative Countries, Ranked by Income Group

Innovation can be instrumental to the success of economies, at macro and micro scales. While investment provides powerful fuel for innovation—the relationship isn’t always straightforward.

The 2020 ranking from the World Intellectual Property Organization (WIPO) reveals just that.

The above map breaks down the most innovative countries in each World Bank income group, based on data from WIPO’s Global Innovation Index (GII), which evaluates nations across 80 innovation indicators like research and development (R&D), venture capital, and high-tech production.

While wealthier nations continue to lead global innovation, the GII also shows that middle-income countries—particularly in Asia—are making impressive strides.

Fueling Innovation

The economic and regulatory spheres within countries can have an enormous impact on their level of innovation—and vice versa, as innovation in turn becomes an economic driver, stimulating further investment.

The positive feedback loop between investment and innovation results in the success of some of the top countries in the table below, which shows the three most innovative countries in each income group.

Switzerland, Sweden, and the U.S. are the top three in the high-income group. Considering that Switzerland has the second-highest GDP per capita globally, it is not a surprise leader on this list.

Upper middle-income countries are led by China, Malaysia, and Bulgaria. Note that China far surpasses other nations in the upper-middle-income group ranking, reaching 14th spot overall in 2020. Others in the income group only appear in the overall ranking after 30th place.

Below are several income group leaders, and some of their key areas of output:

• Switzerland: First in Knowledge Creation, second in Global Brand Value
• U.S.: First in Entertainment and Media, Computer Software Spending, Intellectual Property Receipts
• China: First in Patents Registered
• Vietnam: Second in High-Technology Net Exports
• India: First in Information and Communication Technology Services Exports
• Tanzania: 23rd in Printing and Other Media

Shining a Light on Global Innovators

Since 2011, Switzerland has led the world in innovation according to this index, and the top five countries have seen few changes in recent years.

Sweden regained second place in 2019 and the U.S. moved into third—positions they maintain in 2020. The Netherlands entered the top two in 2018 and now sits at fifth.

Here’s how the overall ranking shakes out:

Nordic countries like Sweden, Denmark, and Finland continue their strong showing across innovation factors—like Knowledge Creation, Global Brand Value, Environmental Performance, and Intellectual Property Receipts—leading to their continued presence atop global innovators.

But the nations making the biggest moves in GII ranking are found in Asia.

China, Vietnam, India, and the Philippines have risen the most of all countries, with all four now in the top 50. China broke into the top 15 in 2019 and remains the only middle-income economy in the top 30.

In 2020, South Korea became the second Asian economy to enter the top 10, after Singapore. As the first Asian country to move into the global top five, Singapore joined the leaders in 2018, and now sits at 8th place.

In another first for 2020, India has now broken into the top 50.

Innovation Input & Output: The Overachievers

While annual rankings like these confirm the importance of a robust economy and innovation investment, variations in the relationship between input and output are not uncommon.

The correlation between wealth and innovation isn’t always straightforward, and neither is the connection between innovation input and output.

Below is an overview of the GII inputs and outputs, as well as several of the world’s overall leaders in each pillar.

Input variables can be characterized as factors that foster innovation—everything from the quality of a country’s university institutions to its levels of ecological sustainability.

Output factors include innovation indicators like the creation of new businesses, and even the number of Wikipedia edits made per million people.

Countries with impressive innovation outputs compared to input levels include:

• China: 26th in inputs, but sixth in overall innovation outputs
• Netherlands: 11th in innovation input, but fourth across outputs
• Thailand: 48th in overall input, first in business R&D
• Malaysia: 34th in overall input, first in high-tech net exports

Innovation Fuel Reductions Up Ahead?

Although financial markets have ignited, the economy as a whole has not fared well since lockdowns began. This begs the question of whether a steep decline in innovation capital will follow.

In response to the 2020 pandemic, will spending on R&D echo the 2009 recession and aftermath of 9/11? Will venture capital flows continue to decline more than they have since 2018?

Because innovation is so entwined with the economic growth strategies of companies and nations alike, the WIPO notes that the potential decline may not be as severe as historical trends might suggest.

No Stopping Human Innovation

Thankfully, innovation opportunities are not solely contingent on the level of capital infused during any given year. Instead, the cumulative results of continuous innovation stimuli may be enough to maintain growth, while strategic cash reserves are put to use.

What the GII ranking shows is that inputs don’t always equal outputs—and that innovative strides can be made with even modest levels of capital flow.