regulatory environments, and restructure highly regulated labor markets and welfare systems. In fact, the Jospin government submitted an expansionary budget for 1999 with a heavy emphasis on social spending and has proposed reducing the workweek to 35 hours, 90 and the Schröeder government proposed increasing some taxes on companies and reversing Helmut Kohl's labor market reforms.
In Asia, Taiwan's entrepreneurial culture and vibrant small company sector have helped the island weather the Asian economic storm better than most. One of the keys to Taiwan's success is that, unlike Japan and South Korea, where government ministers identify and fund high-technology initiatives (and shield uncompetitive enterprises), Taiwanese companies have largely made their own way without government interference. Although Japan would benefit from emulating Taiwan's entrepreneurial environment, Prime Minister Keizo Obuchi, like his predecessors, appears to lack the will or ability to reform a regulatory system that puts start- ups at a disadvantage. China's potential is enormous, particularly given the entrepreneurial vigor of the Chinese people, but it will be some time before China's government moves to a market economy and reverses decades of communist policies that have stunted entrepreneurial activity. In sum, European and Asian governments will need to remove myriad regulatory impediments to entrepreneurs in order to foster venture capital activity on a par with the United States.