Toward an Entrepreneurial Society: Why Measurement Matters

It is better to travel an illuminated path toward future economic progress than to stumble in an unlit direction. Measuring innovation is central to understanding economies everywhere as they evolve and adapt in the face of globalization. Improvements to our measurement of innovation will help to ensure sustained economic strength and improvements in human well-being. Decades of disappointing development will not be reversed unless indicators of societal advancement keep pace with changes in the way society functions. For emerging economies as well as established ones, national income accounts developed three generations ago to measure macroeconomic performance need to be complemented by “national opportunity accounts” tracking the leading indicators of change in the 21st century. To be sure, updated approaches to measurement will not create an entrepreneurial society. However, measurement is a first step toward accountability, which in turn is an essential element of good government. Countries that — whether through private initiative or government action — create conditions favorable to entrepreneurship merit the recognition that can come with appropriate measurement. Where opportunity is present and widely perceived, investment and future growth may then follow naturally. Past experience indicates that movement toward an entrepreneurial society will have profound and lasting effects that go beyond economics. As individuals step into the market, assume risk, and work to turn their aspirations into businesses, they will insist on political as well as economic liberalization. In this manner the expansion of entrepreneurship is linked to the development of freedoms. Ironically, entrepreneurs, who are by nature agents of change, may prove in the coming century to be among the most important forces of global stability. For those who worry about questions related to expanding human welfare through technical change and economic growth, the systematic measurement of innovation and its impact is, for all of the reasons sketched above, arguably the most important social science challenge of our times. Without effective measurement and assessment, poor decisions will follow. This is no small matter. As Lawrence Summers has observed in the pages of this journal, “It is a tragedy — it is, in a sense, killing people — when resources are poorly allocated.” If history has any global lessons, one is that valuable public resources that are taken for granted soon become scarce or disappear. The institutions that underlie the prosperous economic system we all share — what I have referred to as “entrepreneurial capitalism” — are no different. Accountability for the future means accounting for the present.