12 March, 2007

Importance of the cost of land on entrepreneurship

One other factor that weighs heavily on entrepreneurship is the cost of land (and therefore the cost of living). The UK is cramped nation of 60 million people - space is in high demand, driving up the cost of land. The US is a vast nation that remains sparsely populated, even with 300 million people in it. The risk of starting a business (and possibly losing your home) is much more significant in the UK than US. For the more extreme contrast, compare with Japan (130 million in a country most mountainous that 75% is uninhabitable).

As a side note, land is more expensive in California than elsewhere in the US, approaching the value in the UK. In my experience, Texas with a reputation for cheap land, hard work and can-do attitude, is much more entrepreneurial than California. Silicon Valley has historically built an innovation cluster (compare with London's financial industry) and now has all the ingredients to make building new high-risk businesses much easier.

No comments: