Editor’s note: Vivek Wadhwa is an entrepreneur in the Triangle turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwaand find his research at www.wadhwa.com.

Tax breaks, bailouts, and stimulus packages for big business are the most commonly prescribed remedies for economic growth. Policymakers believe that such companies as General Motors (NYSE:GM), Citibank (NYSE:C), and Intel ( NASDAQ:INTC) form the backbone of the U.S. economy. Creating policies to support them, they think, will develop jobs and boost gross domestic product.

These behemoth-centric policies are misguided. Because new, small businesses create the most jobs, a handful of innovative startups that become billion-dollar businesses will most drive GDP growth.

Companies old and new are continuously and simultaneously destroying and creating jobs. When you look at the big picture, as the Kauffman Foundation did in a report it released this summer, you find that established companies are job destroyers.

From 1977 to 2005, they erased 1 million net jobs per year. At the same time, new businesses in their first year added an average of 3 million (net) jobs annually; they were the job creators.

Young companies also create jobs fastest: On average, one-year-old enterprises create nearly 1 million jobs, while 10-year-olds generate 300,000 per year, according to the report. Startups drive job growth, and they should be the focus of job-creation policies-not the larger, established employers.

Even if policymakers were to do everything right in nurturing startups and putting the economy back on track, the U.S. would merely regain the 3 percent GDP growth rates that have been the norm. How do we get the economy to grow at 4 percent, doubling GDP in 18 years, vs. 24 years? This would have the effect of lifting millions out of hard times while creating jobs aplenty.

You can read all of Wadhwa’s article in Businessweek.

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