How can entrepreneurship be activated through anti-crisis interventionist economic policy programmes in a situation of high inflation?
In a situation of developing economic downturn, the importance of interventionist activation of entrepreneurship, supporting business entities in order to reduce the scale of the increase in unemployment and the decline in incomes, increases. In a situation of rising inflation and economic downturn, the activation of economic processes through anti-crisis public financial aid programmes may be difficult. Rising inflation can exacerbate uncertainty and economic risks, and can hinder the planning and implementation of new investment projects, new business ventures by companies and enterprises. Central banks are raising interest rates in an attempt to curb rising inflation. Credit is becoming more expensive. Loans offered by commercial banks are becoming more difficult to access. Investment levels are falling. Businesses are carrying out fewer new investment projects. The activity of economic processes is declining and the prosperity of the economy is worsening. The deepening downturn may lead to an increase in unemployment. As a result, it is possible that at the end of 2022 or in 2023, many countries will see a deep economic downturn, a recession of the economy, possibly also stagflation. In order to limit the downturn of the economy, it is necessary for the government to apply anti-crisis programmes for financial support of economic entities and activation of entrepreneurship. Such anti-crisis public financial assistance programmes were recently applied on a large scale during the economic crisis and recession of the economy in 2020 caused by the SARS-CoV-2 coronavirus pandemic (Covid-19) and the introduced lockdowns imposed on selected, mainly service sectors of the economy. The scale of the applied financial public assistance implemented as part of the anti-crisis injection of additional money into the economy in the form of subsidies and workers' wage subsidies granted to companies and enterprises contributed to the increase in inflation, which already started to rise almost from the beginning of 2021. In view of the above, on the one hand, anti-crisis business activation programmes are necessary in order to limit the scale of the rise in unemployment, which is likely to appear in 2023 when the economy is in recession. On the other hand, however, in view of the currently rising, double-digit inflation, the possibility of applying further anti-crisis state aid programmes is limited.
In view of the above, I would like to address the following question to the esteemed community of researchers and scientists:
How can entrepreneurship be activated through the application of anti-crisis interventionist economic policy programmes in a situation of high inflation?
What is your opinion on this topic?
Please respond,
I invite you all to discuss,
Thank you very much,
Warm regards,
Dariusz Prokopowicz
The focus must be to prompt turn toward to production natural resources.
The essential substances what we need For living cannot be compromised on. Therefore, more investment must be allocated to natural production, for food and to collaborate to enterpreneurship.
Regards
Fatema Miah
Agriculture is the lowest-hanging fruit that can help developing economies manage their poverty levels and ensure food security. At this stage, governments should consider subsidiaries for farmers, and split payments for mechanised farming equipment among others. This will then translate into reducing the cost of materials for the production of goods, hence higher profitable for entrepreneurs.
The capacity of Fiscal Policy depends on the CA deficit levels of the country. We should avoid doom loops between debt and risk premium and prevent the vicious reinforcement cycle of depreciating currencies and high inflation that countries tend to go to in order to finance themselves, which in view of the following probable recession will worsen the pain of any fiscal policy decision. Subsidies are necessary, but they are not the answer, nor it is a cut in investment trough interest rates. Structural reforms need to be done through programs that target the supply side of the economy and not the demand. Support productivity is the best long-term solution. Also, these programs should aim the country to be a net exporter.
All economics down-tourns will lead to a market clearance of firms. Entrepreneurs, which are the small sharks in the ocean economy are the worst affected. However, for the braves and capable enough entrepreneurs, these structural reforms (even if not applied to a 100%) will create a different export mindset to start a business, not just because of the environment in which they can grow but also because it will become part of their culture.
Therefore, structural reforms at the governmental level towards GVA are key to a well development at the firm level in the stagflation scenario that we are facing nowadays and, most importantly for the long-run economic growth and stability of the economy.
Encouraging Balanced Development and adopting urbanization to create modern cities and towns through mortgages, estate development and tourism expansion.
