When it comes to making something out of nothing, Israel ranks second in the world. A new study by the London- based Center for Policy Studies found that next to Hong Kong, Israel has more self-made billionaires than any other country.
The report looked at 1,000 self-made billionaires, termed “SuperEntrepreneurs,” from 15 years’ worth of Forbes annual lists and calculated how many each country around the world produced in proportion to their total population.
Those who inherited their fortunes were excluded.
Hong Kong led the list with 2.831 SuperEntrepreneurs per million inhabitants, followed by Israel with 1.788, the United States with 1.388, Switzerland with 1.229 and Singapore with 1.053.
Funnily, the study found strong correlations between SuperEntrepreneurship and several factors for which Israel is not known: “There is a strong correlation between high rates of SuperEntrepreneurship in a country and low tax rates. Equally, a low regulatory burden and high rates of philanthropy both correlate strongly with high rates of SuperEntrepreneurship.”
The World Bank’s Ease of Doing Business Index, which ranks things like regulation and tax burden, put Israel at 35th in the world in 2014.
Similarly, Israel ranked 54th on the 2010 World Giving Index, which measures how charitable people in different countries are.
Israel’s self-starting nature is only part of the picture. Countries such as Greece, Turkey, Spain, Portugal and Italy had many self-employed people, but few self-made billionaires. The reason, according to the study, is that self-employed people also have to be innovative, developing new products and approaches to business.
Yet Israel excels in other fields associated with the trait.
SuperEntrepreneurs tend to be well-educated, the study found. In the US, for example, SuperEntrepreneurs were five times more likely to hold a PhD as a member of the general population.
Israel also has free markets and strong property rights based on the English legal system, which was more strongly correlated with SuperEntrepreneurs.
Critics of the study could note that with such a small number of SuperEntrepreneurs, the numbers could swing wildly with the addition or subtraction of just one individual. While the US boasted 411 self-made billionaires, Israel had just 13, and New Zealand, ranked 12th, had just two.
To counter this problem, the study also looked at trends by region.
“The US is roughly four times as entrepreneurial as Western Europe and three times as entrepreneurial as Japan, measured either in terms of SuperEntrepreneurs, large-firm founders or venture-capital investment as percentage of GDP,” it found.
Overall, the report recommended that governments lower taxes, especially capital-gains taxes, and reduce burdensome regulation to unleash innovative entrepreneurs.