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Startup Nations: How Do Countries Create a Knowledge Economy?

The capital building

"Today knowledge has power. It controls access to opportunity and advancement. Success in the knowledge economy comes to those who know themselves - their strengths, their values, and how they best perform."

- Peter Drucker

As advanced economies increasingly become “knowledge economies,” a nation’s ability to nurture agile “startups” has become a metric of economic success. Silicon Valley has become a global brand, with nations across the globe pouring billions of dollars into their own tech incubators. Likewise, Israel has been called “startup nation” due to its concentration of new and successful high tech firms. Other startup epicenters like Canada, Sweden, Hong Kong, and Singapore all boast environments conducive to dynamic and disruptive companies. Yet what do these epicenters have in common? What elements go into making a country a “startup nation” and why are they so rare? Can a country “create” a startup culture from scratch?

As the knowledge economy grows, scholars agree that those nations able to continuously produce dynamic and innovative firms will own the future. This exercise encourages students to investigate the linkages between economic and political institutions and startup nations, to determine what it takes to build a startup culture, and what elements stand in its way.


  1. Generate a list of the top 10 startup nations on earth. Develop your own criteria using any data in DemCap Analytics.
  2. What are the commonalities and differences between these countries?
  3. What seem to be the most important qualities of startup nations? Are social freedoms important as well?
  4. Divide into groups of 4-5. Pick a set of three countries to compare: (France, Netherlands) OR (Japan, Hong Kong). Which countries struggle as startup nations and which don’t? Examine and propose reasons for the differences between the two nations. 
  5. Do political institutions play into startup efficacy? Do they matter at all? If so, which ones?
  6. Back in your groups, pick either Mexico or Russia to analyze. Devise a short- and long-term strategy to improve the nation’s startup record. Be prepared to share with the class.