Published on April 18th, 2016 | by Amira Almakzomy | Credit: Harun Kaya0
What can governments do to boost entrepreneurship?
The significance of entrepreneurship to any economy goes beyond creation of jobs. It not only creates jobs and lifts people out of poverty but also is a significant factor in fostering innovation of highly sophisticated products that make our lives more enjoyable. Great minds need to be supported, in order to have the courage to put their ideas into reality. There are many decision-makers and stakeholders involved that can make a change and boost the entrepreneurial spirits in creative individuals.
Local municipalities are one of the few key parts of the public sector that can use their resources with partners to drive local investment and enterprise, they are the growth enablers. As Derek McCallan from Northern Ireland Local Government Association (NILGA) said, Councils have the power to unlock policies, investment and growth like no other part of the government.
Several studies reveal that entrepreneurial sector contribution to employment and GDP is on the increase. For this reason, it is suggested that governments should minimize the constraints on entrepreneurship.
What can decision makers do to encourage entrepreneurship in both developed and developing countries?
- Support creativity and innovativeness
OECD as well as European Union has in strong terms recommended innovation as a strategic driver for economic development. Wonglimpiyarat stated that productivity, standard of living as well as sustainable economic development may be enhanced through technology innovations. Innovation plays a very crucial role in attaining economic development by concentrating on science and technology-based knowledge. Innovation has become an indispensable stimulant for nation’s development irrespective of whether the country belongs to industrialized or developing. The innovativeness of an entrepreneur may perhaps tend to improve towards the attainment of economic development through the development of SMEs. These SMEs within the locality will employ more people thereby increasing the wealth of the locality. In sum, Innovative based businesses play a substantial part in economic development by employment generation, wealth creation, new markets development as well as accelerating technological development.
- Government Funding
Accessibility of monetary services is one of the significant factors for the continued existence of majority of the newly formed firms as well as an essential element in entrepreneurship practice. Governments could use direct subsidies, and tax incentives to introduce large amount of resources to the entrepreneurial process. For the achievement of economic development through entrepreneurship, there should be a funding pattern by which the support programme will be constantly funded.
- Create the right environment for success
Create environment in which entrepreneurs and family business can thrive. Developing an appropriate legal and business environment is also very important. Arnaldo Abruzzini the secretary general from Eurochambres said, the most important is the ‘ecosystem’ we live in, it needs to support the entrepreneurs. Thus, entrepreneurs need access to environment that supports them. We also have to enable SME’s to turn environmental changes into opportunities.
Not only is the environment challenging, but there is also a widespread culture that does not recognise or reward entrepreneurial endeavours enough and does not celebrate successful entrepreneurs, as role models who create jobs and income. To make entrepreneurship the growth engine of our economy Europe needs a thorough, far-reaching cultural change. States need to promote the entrepreneurial mind-set and spirit. There needs to be efficient cooperation between the knowledge institutions and business communities, as well as an increased cooperation between universities, the government and the business communities.
- Encourage risk taking
The governments need to encourage entrepreneurs to be risk takers. They can do that by organizing programmes in the form of competitions, where one with the best ideas would win financial support for the start-up. As Mr. Gunther Oettinger from European Commission has said, they could make a two-day event, where regions would give prizes for ‘entrepreneurs of the year’.
Arnaldo Abruzzini has also added, entrepreneurs don’t want someone telling them what they should do, instead they just want to produce something that is demanded. To conclude on ‘what can be done’ Abruzzini said they need ‘risk’ money and people who believe in them.
- Access to smart capital
Need for banks that are willing and able to provide loans for the young people to start putting their ideas into reality. Constance Kann from European Investment Bank said access to finance needs to be made more easy, even though European Investment Bank already supports entrepreneurs greatly, as European Investment Fund is 100 % for SME’s. She also added there is a need for bottom up local approach.
- Enable networking and exchange
There is a great need for more networking programs. This could be in the form of networking events organized by various institutions. However, it can also be in the form of something similar to what already exists, such as the Erasmus Entrepreneurship exchange platform (www.erasmus-entrepreneurs.eu).
- Education of young people
Culture of entrepreneurship is closely linked to education. Creating and spreading innovation culture and culture of entrepreneurship in Europe in order to nurture a new generation of entrepreneurs is needed. Entrepreneurs need to be going to schools to tell stories and act as role models, as guest lectures or professors. Kids need to see living examples of the entrepreneurs in order to get motivated. Lowri Evans from European Commission said, we need to make entrepreneurship more acceptable culturally, so that young people see it as attractive and not as a plan B. Moreover, Constance Kann from the European Investment Bank said, education needs to include the entrepreneurial skills. Investing in entrepreneurship education is one of the highest return investments Europe can make. For instance, surveys suggest that between 15% and 20% of students who participate in a mini-company programme in secondary school will later start their own company, a figure that is about three to five times that for the general population. Whether or not they go on to found businesses or social enterprises, young people who benefit from entrepreneurial learning, develop business knowledge and essential skills and attitudes including creativity, initiative, tenacity, teamwork, understanding of risk and a sense of responsibility. This is the entrepreneurial mind-set that helps entrepreneurs transform ideas into action and also significantly increases employability.
- New horizons: reaching out to women, seniors, migrants, the unemployed, and young people
One factor that has a lot of potential are specific programs for women and migrants. Women and migrants are vulnerable groups that have high potential in entrepreneurship. Programs targeting women, migrants and other ethnic groups would be beneficial for encouraging entrepreneurship between them. These programs could include special budgets reserved for these groups, or for instance more lenient legal procedures for start-ups.
With the above-mentioned factors, governments and decision-makers can help in boosting entrepreneurship in their regions for the overall benefit of the economy.