India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich, but it’s clearly true.

Everyone here is on the make and open to opportunity. You need to hire someone to fix your wifi or repair a bicycle or make a movie? You can find someone within hours. “Yes, we can do that” is the default answer to any question. Of course, it may have to be done illegally but, subject to that, it can be done. The can-do attitude is especially prevalent in Mumbai but it’s true elsewhere in India as well.

Indians are entrepreneurial because they work for themselves. Overall, 95% of Indians are self-employed compared to just 10% of workers in the United States. That is perhaps one reason why the National Academy of Science report on immigration found that “Indian immigrants are the most entrepreneurial of any group including natives.”

However, when we reverse the employment statistic, only 5% of Indians work for a firm compared to approximately 90% of US workers, we see the problem.

No Other Way

Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. As a I wrote in my Cato paper with Goldschlag, less developed countries in general, not just India, have more entrepreneurs,

If we define entrepreneurship as self-employment then there is much more entrepreneurship in poorer countries. People in poorer countries have to be entrepreneurs because there are relatively few jobs, that is to say few employers of large numbers of workers. Moreover, although not all self-employed workers have the skills or temperament for entrepreneurship, the identification of entrepreneurship with self-employment is not a definitional sleight-of-hand.

Travelers to less developed economies often are surprised at how much more market-oriented, dynamic, and entrepreneurial these economies appear to the naked eye. Indeed, tourists are more likely to visit an actual market in a developing economy than they are at home. The visceral hustle and bustle of the town market is a display of real entrepreneurship. The greater familiarity that people in developing countries have with entrepreneurship is likely one reason why immigrants to the US are more than twice as likely to start new firms as are natives.

The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.”