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Arizona, country suffered entrepreneurial lapse, Brookings report says

PHOENIX — The land of opportunity appears to be turning into a wasteland for entrepreneurship.

According to the Brookings Institution, business dynamism plummeted in all 50 states and all but one of the 366 metro areas in the country during from 1978-2011. Only McAllen, Texas, has had more new businesses open than close.

Brookings defines business dynamism as “the process by which firms continually are born, fail, expand, and contract, as some jobs are created, others are destroyed, and others still are turned over”.

In Arizona, more than twice as many businesses have shut down than opened their doors during that time period. Robert Litan with Brookings said his research group doesn’t have a definitive answer as to why this is happening, but he does have a few theories.

“One may be that society is becoming more sclerotic (not being able to adapt). Big firms may be coming bigger. There may be more regulation that may be deterring new firms from forming,” he said.

While he doesn’t know of a definitive reason, Litan said he has the perfect solution for America to start churning out entrepreneurs once again: Immigration.

“Greatly liberalize our immigration laws to let in high-skilled immigrants — people who come here to study to get master’s and PhD’s in the so-called tech areas,” he said. “(Another solutions is) to let in foreign entrepreneurs.”