Fast buck: the flow of innovation out of the US and into emerging markets is only now being reversed

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The US is not only the world’s biggest economy but a country of trailblazers, and the FT’s list of leading business pioneers reflects that. Many of the names picked by the judges are from western industrial economies, but a majority are either American or built their fortunes in the US.

There is inevitably a backward-looking element to the choice. By definition, a pioneer does something different from the crowd, the true importance of which might be hard to identify for years, or even decades. That gives the US a built-in advantage. For most of the 20th century it was the world’s fastest-growing, strongest economy. From the late 19th century, as the US took over as the world’s leading economy, its free market and highly competitive structure spawned powerful innovations in diverse industries. It also told its story to the world through Hollywood and its advertising industry.

Even now, its strength in internet technology and software allows people such as Mark Zuckerberg, the Facebook founder, and Jeff Bezos, the founder of Amazon, to follow in the path of business pioneers including Henry Ford, the industrialist, and JP Morgan, the banker. China and Asia are rising rapidly, but many innovations still have an American accent.

The FT list reflects how this geographical bias is changing, with Asian pioneers such as Narayana Murthy, founder of Infosys, the Indian IT group, and Li Ka-shing, the Hong Kong tycoon. But it will take several decades for the shifted balance of the world economy to be reflected fully in groundbreaking individual achievement.

Warren Buffett, one of the year’s pioneers, put it well in his 50th anniversary letter to Berkshire Hathaway shareholders. “The mother lode of opportunities runs through America . . . Through dumb luck, Charlie [Munger, Berkshire’s vice-chairman] and I were born in the United States, and we are forever grateful for the staggering advantages this accident of birth has given us.”

These advantages include a cultural enthusiasm for trying to create something different. The immigrant culture of the US is highly inventive. Newcomers such as Andy Grove, the former boss of Intel, the computer chipmaker, and the children of immigrants, such as Amadeo Giannini, founder of the Bank of America, were eager and ambitious to build cutting-edge businesses.

The immigrant culture of the US is highly inventive

The US economy had great advantages for business pioneers. It was large, without the boundaries that limited markets in Europe, and it had a strong legal and patent system to protect and nurture invention. The Wright brothers were just as strong-willed in trying to protect their “flying machine” from competition through patents as in piloting it.

The country was also the world’s largest consumer market, where companies such as Ford, McDonald’s and Intel could develop and market new products and then sell them overseas. This flow of innovation out of the US and into emerging markets is only now being met at scale in reverse.

As a result, even successful entrepreneurs such as Lei Jun, founder of Xiaomi, the Chinese smartphone manufacturer, often build on technology and ideas created in the west, notably in Silicon Valley. They are producing their own versions of US concepts.

There are clearly exceptions. The Indian outsourcing industry, for example, did not follow a US lead. It was built on the country’s unique strengths, aided by technological change. Japanese carmaker Toyota took much from Detroit but Eiji Toyoda and Taiichi Ohno’s high-quality production system overtook the west, and was adopted by Ford and General Motors.

The US pioneered open, inventive capitalism, supported by strong laws and public investment in technology. That model has been exported successfully to the rest of the world, even to communist China. A new generation of global pioneers is reaping the benefits.

Copyright The Financial Times Limited 2017. All rights reserved.
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