How to increase the efficiency of the use of financial subsidies from the state's public finance system so that they effectively activate entrepreneurship and innovation of business entities?
How to increase the efficiency of the use of financial subsidies from the state's public finance system so that they are largely allocated to real pro-development investment projects, effectively activate economic processes, entrepreneurship and innovation of business entities and accelerate the economic development of the country?
How should the financial subsidies of the European Union granted to Poland under the National Reconstruction Plan be distributed so that they primarily contribute to the effective development of the national economy?
Increasing the efficiency of the use of financial subsidies from the state's public finance system, so that to a large extent the said subsidies are allocated to real pro-development investment projects, effectively activate economic processes, entrepreneurship and innovation of business entities, and thus the country's economic development can be significantly accelerated in the coming years. Unfortunately, there is little time, as only 2 years to effectively use this money which was a result of the failure to meet the so-called milestones set by the European Union by the previous government in Poland, which functioned from 2015-2023. The key issue is that most of these funds should realistically feed new investment projects, not be “eaten up”, consumed in current purposes that do not have the character of investment, not be wasted, not be subject to financial embezzlement, etc.., because then the impact of this money on the economy, on economic growth in the next few years, the impact on improving economic development will be much smaller. In view of the fact that the funds to be used, i.e. PLN 600 billion (total low-rate loans and grants), will be relatively large and the time to use them will be short, so it is necessary to improve the existing national procedures in the matter of application, substantive analysis of submitted applications for grants, granting of funds, ongoing monitoring of the implementation of investments and their settlement. One of the effects of unblocking access to these funds granted under the National Reconstruction Plan is the process of appreciation of the PLN against the euro, which is already taking place since the autumn of 2023, and reduces the scale of “import” of inflation into Poland thanks to such large euro subsidies to come to the country where I operate. Well, thanks to these funds, economic growth in Poland as early as 2024 can be higher than the projected about 3% if these funds are effectively, well invested, etc. This scenario will come true, assuming that other international, global macroeconomic variables do not deteriorate, i.e. current risks do not increase significantly, and there are various risks outside Poland that affect the Polish economy. A kind of symptom of this issue was the strong increases in shares on the Warsaw Stock Exchange on Monday 16.10.2023, i.e. just after the elections on 15.10.2023 when one of the internationally recognized rating agencies suggested that thanks to the outcome of these parliamentary elections, the probability of unlocking European Union subsidies for Poland from the National Reconstruction Plan would increase significantly. Besides, it is important to point out the legitimacy of continuing key investment goals such as accelerating the process of green energy transformation. An important determinant of increasing the scale of investment processes carried out as part of the green transformation of the power industry is the issue of reducing the risk of a future energy crisis like the one that occurred in Poland in 2022, in order to meet the guidelines of the European Union under the Green Deal, which should result in reducing the scale of future energy price increases in Poland, etc. The green transformation of the energy industry is a key rarity of the green transformation of the economy towards building a green closed loop economy. Besides, subsidies from the European Union's financial programs, i.e., primarily from the National Reconstruction Plan, should not only be used for investment projects carried out mainly by large, few energy companies, but should be used to a large extent to finance activities carried out by prosumer citizens to increase energy security for the household and reduce the costs incurred in subsequent years for energy purchases, i.e. prosumer ventures, e.g., installing photovoltaic panels on the roofs of their homes as part of the expansion of such programs as “My Current,” for example, so that prosumers' own participation in these investment processes is small, as it is currently still too large and is a financial barrier for many households. In addition to the economic processes related to the green transformation of the economy, including mainly the green transformation of the energy sector, the financial resources from the National Recovery Plan are to finance investment projects carried out as part of the continuation of the processes of digitization of the economy, including enterprises, implementation into companies and institutions of new ICT and Industry 4.0/5.0 technologies, including, for example, Big Data Analytics, artificial intelligence, cloud computing, etc. In addition, the aforementioned financial subsidies are to be used to support the implementation of investment projects in the field of investment, through which the state of road and rail transportation infrastructure is to be improved. In addition to this, support from the National Reconstruction Plan funds is also to be given to the health sector, although the importance of this support has significantly decreased since there is no longer a Covid-19 pandemic, and the European Union's program of these grants was developed in 2020 during the pandemic and was originally intended to largely support the anti-pandemic activities carried out within the medical sector.
I have also described many of these aforementioned aspects in my publications posted on my profile of this Research Gate portal.
The key issues of the problematic sources of Poland's exceptionally deep energy cross in 2022 are described in my co-authored article below:
POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAINE AND YEARS OF NEGLECT TO CARRY OUT A GREEN TRANSFORMATION OF THE ENERGY SECTOR
Article POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAIN...
Article CRISES IN THE ENVIRONMENT OF BUSINESS ENTITIES AND CRISIS MANAGEMENT
In view of the above, I address the following question to the esteemed community of scientists and researchers:
How should the financial subsidies of the European Union granted to Poland under the National Reconstruction Plan be distributed, so that they primarily contribute to the effective development of the national economy?
How to increase the efficiency of the use of financial subsidies from the state's public finance system, so that they are largely allocated to real pro-development investment projects, effectively activate economic processes, entrepreneurship and innovation of business entities and accelerate the economic development of the country?
How to increase the efficiency of the use of financial subsidies from the state's public finance system so that they effectively activate entrepreneurship and innovation of business entities?
What do you think about this topic?
What is your opinion on this issue?
Please answer,
I invite everyone to join the discussion,
Thank you very much,
Best wishes,
Dariusz Prokopowicz
The above text is entirely my own work written by me on the basis of my research.
In writing this text, I did not use other sources or automatic text generation systems.
Copyright by Dariusz Prokopowicz
Financial subsidies can be a powerful tool to jumpstart entrepreneurship, but inefficiencies can hinder their impact. Here are some ways to improve the efficiency of subsidies and get more bang for your buck:
Target the right audience: Don't spread subsidies thin. Identify businesses with high growth potential, especially in sectors that align with national development goals. This could be green tech startups or businesses creating jobs in underprivileged areas.
Focus on outcomes, not inputs: Subsidies shouldn't just reward existence. Tie them to achieving specific milestones, like creating jobs, developing new products, or reaching export targets. This incentivizes businesses to use the funds effectively.
Use transparent and competitive application processes: Avoid a free-for-all. Clear criteria and a competitive selection process ensure the most deserving businesses receive support. This can also reduce the risk of corruption.
Consider alternative subsidy structures: Cash grants aren't the only option. Explore loan guarantees, tax breaks, or matching funds that require businesses to invest alongside the subsidy. This fosters a sense of ownership and reduces deadweight loss (subsidies that wouldn't have prevented business failure).
Provide mentorship and support: Financial aid is just one piece of the puzzle. Offer workshops, mentorship programs, or connect entrepreneurs with business networks. This equips them with the skills to succeed beyond the initial subsidy.
Monitor and evaluate: Track the impact of subsidies. Did they create sustainable businesses? Are there unintended consequences? Regularly assess programs and adjust them based on the data.
By following these steps, we can make financial subsidies a more effective tool for activating entrepreneurship and driving economic growth. It's about creating an ecosystem that empowers businesses, not just giving them a handout.
The best subsidies are not financial ones, as these produce powerful distortions in economic relations. A government needs to make things efficient, in order to promote investments that would not otherwise exist. Thus, such new investments pay less taxes, but generate jobs and income that would not otherwise be generated.
Dear Dariusz Prokopowicz
Diving into how to maximize the impact of financial subsidies to kickstart entrepreneurship in business entities is quite the puzzle, but let's unpack it.
Here's a breakdown:
By implementing these strategies, we can maximize the efficiency of financial subsidies and ignite entrepreneurship among business entities, paving the way for economic growth and innovation.
Increasing the efficiency of financial subsidies to activate entrepreneurship requires careful planning and execution. Here are some strategies to consider:
1. Targeted Subsidies: Identify specific sectors or industries where entrepreneurship is lacking or underdeveloped. Direct subsidies to these areas can effectively stimulate entrepreneurship.
2. Clear Objectives and Criteria: Define clear objectives for the subsidies, such as job creation, innovation, or export expansion. Establish transparent criteria for eligibility to ensure that subsidies are awarded to entities with genuine entrepreneurial potential.
3. Capacity Building: Offer training programs, mentorship, and technical assistance to help entrepreneurs develop their skills and business acumen. Building entrepreneurial capacity can enhance the effectiveness of financial subsidies by ensuring that recipients have the knowledge and resources to succeed.
4. Risk Mitigation: Provide subsidies that help mitigate the risks associated with starting or expanding a business, such as grants for research and development, loan guarantees, or insurance programs. By reducing the financial risks, entrepreneurs may be more willing to pursue innovative ventures.
5. Monitoring and Evaluation: Implement robust monitoring and evaluation mechanisms to track the impact of subsidies on entrepreneurship outcomes. Regular assessments can help identify what strategies are working well and where adjustments are needed to improve efficiency.
6. Encourage Collaboration: Foster collaboration between government agencies, private sector stakeholders, academia, and NGOs to leverage resources and expertise in supporting entrepreneurship. Public-private partnerships and ecosystem development initiatives can create synergies that maximize the impact of financial subsidies.
7. Flexibility and Adaptability: Be flexible and adaptable in the design and implementation of subsidy programs to respond to changing market conditions and emerging entrepreneurial opportunities. This may involve periodically reviewing and refining subsidy schemes based on feedback from stakeholders and monitoring results.
8. Promote Access to Markets and Networks: Facilitate access to markets, supply chains, and networks for entrepreneurs, particularly for small and medium-sized enterprises (SMEs). Supporting market linkages can help startups and SMEs scale up their operations and become more competitive.
9. Promote Innovation and Technology Adoption: Encourage entrepreneurship that is focused on innovation and the adoption of new technologies. Subsidies for research and development, technology commercialization, and digital transformation initiatives can foster a culture of innovation among business entities.
10. Public Awareness and Outreach: Raise awareness about the availability of financial subsidies and provide guidance on how entrepreneurs can access them. Effective communication and outreach campaigns can ensure that subsidies reach their intended beneficiaries and maximize their impact on entrepreneurship.
By implementing these strategies, policymakers can enhance the efficiency of financial subsidies and create an enabling environment for entrepreneurship to thrive.
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