What should be the economic policy for supporting the development of entrepreneurship and innovation?
Should an active, Keynesian and interventionist policy be used to increase spending from the state budget on the development of entrepreneurship support programs and innovativeness of business entities?
However, should neo-classical economics expenditures from the public finance system for programs supporting entrepreneurship and innovation of business entities be small, according to the concept in which the essence of entrepreneurship and innovation lies in its self-acting objective initiation, organization and development?
Please reply
I invite you to the discussion
Thank you very much
Best wishes
Can think of at least 3 strong premises:
Quality: getting quality right.
Efficiency: having efficient programs that dont waste and that are properly managed with appropriate metrics.
industry leadership: focussing on the right industries and innovation.
Provide " friendly" economic and social envrionment to motivate entrepreneurs..at least this is what is missing in Croatia.
Dear Friends and Colleagues of RG
In my opinion, entrepreneurship develops effectively and becomes more and more competitive if the state creates the right conditions for entrepreneurs. First of all, low tax burden and low costs of contributions to the social insurance system. Contributions to the social security system should be adapted to the situation of running a business and the level of income.
On the other hand, there are countries in which the very fact of establishing a business entails the need to pay taxes and high premiums for the social security system even when real economic activity is not carried out and / or does not bring any or very low income and no profits. Such unfriendly tax and business activity systems operate in some countries.
Paradoxically, in some countries, taxes and contributions to the social security system, mainly micro-enterprises, are most heavily burdened with taxes. Paradoxically, micro-enterprises are often the source of new business solutions, innovations, start-up startups, and they are the source of entrepreneurship.
In some countries, the contributions paid by entrepreneurs to micro-enterprises for the social insurance system are fully voluntary and this has not led to a collapse and crisis in the state's public finance system in these countries. Some of the countries in which these contributions are voluntary are rich, developed countries in which entrepreneurship and innovation are effectively developing.
On the other hand, those countries in which these contributions to the social insurance system are compulsory and regardless of the economic situation, regardless of the generated profits, earnings and whether they actually conduct business activity in real terms, the public finance situation is not the best. What do you think about it? What is your opinion on this matter?
Best wishes
There is no general policy which is applicable to the development of entrepreneurship and innovation for every country or situation. It depends on the situation and who the actor is making the policy. Government approaches it differently than e.g. an NGO or a corporation. Most of the time it is good to develop such programs through public private partnership. And sometimes as is in te case of the development of the internet, the government must take the initiative because of the amount of investment which is required before entrepreneurs can be involved. Or if you have to minimize monopoly to give other actors a chance to participate and increase competition. Government has a general interest in developing entrepreneurship and must take the initiative in creating infrastructure and distribute information when profits can't be made so that there are more participants. Part of the infrastructure is creating an enabling environment. The different stakeholders/actors have different roles to play.
small business should be promoted , funding is an important aspect to support genuine entrepreneurship, which is at small and medium level. Moreover, infrastructural support including financial channels, distribution channels, warehouse, internet, electricity etc should also be on priority. Furthermore, government should encourage entrepreneurial culture amongst the general public instead of inculcating job mind set. Entrepreneurial gurus within the society can impart an important mindset in promoting entrepreneurial mindset which would expose the people to do innovation . This would lead to curtails unemployment while increasing economic activity.
This is a very broad question, having many components.
1. What support is needed by the entrepreneurs 2. What can be provided by the government, through policies? and 3. When such supports can be enacted.
The stages of intentent and ideation (nascent stage) are very personal/individual in nature and the role of any government is very limited. At the stages of execution, i.e the organization formation, possibly governement can reduce the complexity (similar reduction in complexity is necessary at the time of exit as well, and this aspect is less emphasized).
Government on the otherhand, can only reduce the procedural complexity or give financial assistance to some entrepreneurs. The financial assistance has many issues associated with it. The major misconception comes when entrepreneurship is equated with innovation. A few entrepreneurial venture is innovative to a lesser degree, and innovation requires finance which the entrepreneurs lack. In such cases, the ability of agencies to pick up the winner for funding, and success is questionable. The other vast majority of entrepreneurs tinker with different innovation and they do not need support of governement policies to start.
Overall, it is my impression that the government policies may not influence the intention, ideation or start up phase.
If the policies are used to influence during the start up phases, there are dangers of adverse selection and misuse of policies.
Similarly governments role may be limited, or ineffctive to support start up in other business functions such as HR, Operations and Marketing. The government support would be generic in nature and would not give competitive advantage to any specific start up. Secondly, the government would consider a proven track for support and such tracks do not add specific value to new ventures.
However, government can facilitate the initial operational phase by reducing complexity in reporting, tax related issues etc. Because, entrepreneurs are more likely to have less exposure to such issues prior to start (Unless the financial engineering acumen was the reason to start).
In short, policy being common and uniform to all, is less likely to prove crucial to entrepreneurship.
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