Sign up now for TIME's WorldWatch email newsletter. They left France to set up shop in Britain because the U.K. stacks up better when it comes to taxes, administrative burdens and company valuations, says Paeony chairman Chovet. But people with technical, design and production skills are hard to find in the U.K., whereas France has a large pool of such talent. So Paeony, which inserts advertising into online games, split itself in two, with its headquarters in London and its design and production team in Paris. Paeony's experience is far from unique.
Red tape is only part of the problem.
It notes that countries placing heavy administrative burdens on start-ups, such as Italy, Belgium and Austria, create fewer new jobs. Europe has not only a higher unemployment rate than the U.S. but also poorer productivity, a factor the study links in part to underinvestment in new technology. This is true for industry, where the speed of change is higher in both the U.S. and Japan, but it is also true for governments and administrations. Creditors have overlong claims on assets, curbing the ability of bankrupt entrepreneurs to start again. Access to seed capital and other early financing is limited.