The Coming Chinese Entrepreneurial Boom

AKA: “Go west, young Han.”

In her book Unnatural Selection: Choosing Boys Over Girls and the Consequences of a World Full of Men, author Mara Hvistendahl offers a warning for what might come from China’s rapidly increasing sex ratio – namely, violence. The American ‘Wild West’ had a very high ratio of men to women, she reasons, and it also had a high rate of violence. Hvistendahl asserts that the same fate might face much of China in the coming decades.

She might be right. But that might not be the most interesting part of the story.

There’s no doubt that China’s sex ratio for people under the age of 15 is startling. Nationwide there are currently more than 120 boys for each 100 girls.

Of course, this means that over the coming two or three decades, the ratio among grown adults is expected to rise as well. If Ms. Hvistendahl is correct, this could mean higher rates of violence – or, as I previously suggested, it might mean that rates of violence (specifically, murder) will drop.

But America’s West is known for other things besides its untamed past. To this day, the ratio of males-to-females in the US tends to rise as one goes westward. Nine of the top 10 cities (over 100,000 people) with the highest sex ratios in the US are in the West, with 5 in California. In contrast, all 10 with the lowest  sex ratios are in the East. These cities with sharp shortages of men include some of the most violent ones, Philadelphia.

The places with the highest numbers of excess men include places like Sunnyvale, in the heart of Silicon Valley, one of the most economically innovative places in the world. Ms. Hvistendahl might be right that an excess of men leads to violence, but there is more than anecdotal evidence that an excess of men might more often lead to something else: entrepreneurship.

While looking up statistics about the rate of business formation in the US, I found this fascinating study by Shang-Jin Wei and Xiaobo Zhang of the (US) National Bureau of Economic Research from February 2011 (It really is fascinating, if you take the time to read it) about the rate of business formation in China: Sex Ratios, Entrepreneurship, and Economic Growth in the People’s Republic of China.

The authors looked at the sex ratio in various regions of China in 1995 and compared to the formation of new businesses, finding that as the number of males in a given region increases, so does the rate of business formation.

Before you can say “Correlation is not causation”, the authors of the study actually looked at four separate indicators, finding in each case that higher sex ratios tend to lead to more business formation, greater likelihood of doing dangerous or unpleasant work, and higher GDP growth.

The authors surmise that this connection is causal (though not necessarily directly so). That is, an excess of boys very well might lead to more violence and unrest among some males, as Ms. Hvistendahl suggests from the example American Wild West of the 1880s and 1890s. But the example of the American Wild West of 1980s and 1990s, as well as data from China itself in the 1990s and beyond, suggests that many more young Chinese men, only sons in a country with a high savings and investment rate, might start new businesses rather than start killing each other or start a revolution.

If Gapminder’s sex ratio projections form the first graph above are correct, this possible coming decades-long boom in Chinese entrepreneurship might be just getting underway right now.


UPDATE, 21 Jan 2013: This article from, ‘The effects of China’s One Child Policy on its children‘, based on a peer-reviewed article published in Science, suggests that Chinese children born under the One Child Policy are less entrepreneurial than those born before.

  1. Hi, Brad! Just took a chance to see if you were still blogging. Glad you are. Just a question about this entry – did anyone look at male vs female opportunities for entrepreneurship in the US? Business and innovations led by women are increasing; but there continues to remain resistance for funding or non-financial support for women. Great info in your blog. Lots of food for thought. Thanks! Hope all is well with you and yours!

  2. Katherine, you’re the one who got me into blogging and I’m glad I’ve stuck with it.

    I did not look for or find any information about rates of entrepreneurship among women in the US. The article I mentioned in this post looked at the rate of company formation in China and found that it tends to go up at the ratio of men-to-women goes up.

    That is, when young women are in short supply, young men tend to start more businesses.

    You make a good point by pointing out the need for ‘non-financial support’. In Rhode Island I attended a couple of meetings of The Sassy Ladies, a group of women entrepreneurs. They have an excellent series of podcasts at their site which I recommend checking out.

    It was a bit disappointing that at one the meetings all of the attendees, except the organizer, were non-females who were involved in businesses with mostly female customers.

  3. The “murder” statistics quoted in your other post I question a little. If they are crime statistics, they’re essentially irrelevant. The numbers would likely be far outweighed by state-sponsored-death-from-non-natural-causes, i.e. Stalin’s pogroms, the Khmer Rouge, and of course all wars.

    I think during war the “murder” rate probably plummets as many of the males are shipped elsewhere, but there’s definitely some death from non-natural-causes going on. Which is probably more predictive of what we are likely to see with China.

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