South Africa ranked 120 in the latest World Bank Doing Business report for 2016. And while regulation is a big hurdle, the procedural costs of starting a business are only $18, according to the Bloomberg report below. So what if the world’s richest had to put all their funds into starting up companies? South Africa’s Christo Wiese has a net worth of $6.94bn, and would be able to start 385,527. Compare that to the world’s richest Bill Gates who can start 137,196, as costs in the United States are $605. It’s not an answer to South Africa’s unemployment issue but it does highlight what is possible. – Stuart Lowman
by Marine Strauss and Wei Lu
(Bloomberg) – How many businesses could be created if local entrepreneurs received the fortunes of the wealthiest? We created the 2016 Robin Hood Index to look into the question.
We took the richest individuals of 42 economies with different political regimes and regulatory environment for businesses, and compared their net worth to the procedural start-up cost for small- to medium-sized companies.
The index shows, hypothetically, how many businesses can be started with the net worth of each country’s wealthiest individuals. The numbers were crunched using data from the Bloomberg Billionaires Index and the World Bank Doing Business 2016 report. Start-up costs was expressed in the original Doing Business report as a percentage of the gross national income per capita.
Bill Gates’ net worth would help create 137,296 businesses, at a cost of $605 apiece if distributed to local entrepreneurs in the U.S. That could have huge implications for the labor market. In America, small businesses have contributed the most to job growth, adding 1.4 million new jobs in 2014, according to the U.S. Small Business Administration.
Entrepreneurs from China, the world’s most populous nation, would be able to get the most start-ups up and running than any other country – 596,303 to be exact – thanks to Dalian Wanda Group’s Wang Jianlin, whose own life story is an inspiration to fledgling entrepreneurs. In China, though, corruption and red tape are still obstacles to new businesses.
The costs of starting a business are ranked among the highest in South Korea and the United Arab Emirates – where the least businesses would be created, 2,971 and 2,345 respectively, according to the Robin Hood Index.
The gauge only takes into account the procedural expenses. There are plenty of other considerations to factor in, from the cost of labor, rent and paid-in capital to name but a few. Other costs are difficult to quantify such as bureaucracy, implicit bribery, enforcing legal contracts, and so on, but are also critical to getting a business off the ground.
Still, as an intellectual exercise, one can only imagine what the champions of 42 countries, with an estimated wealth of $756 billion – a cool 1% of the world’s 2016 GDP – can do with their money that government and agencies can’t.
- The index is an adaptation of an original work by the World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by the World Bank.