Entrepreneurs speak out - A call to action for G20 governments
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7 Februarie 2012 |
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ERNST & YOUNG S.R.L. |
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Executive summary
Entrepreneurs have a crucial role in determining the future prosperity of the G20. With countries haunted by the prospect of a return to recession, it is the creation of new business that will have the greatest impact on growth and employment.
For policy-makers in the mature-market economies, until recently focused primarily on reducing fiscal deficits and containing the size of public debt-to-GDP ratios, the goal of sustained economic growth has, in recent months, become an increasingly elusive ambition. This means there is scope for these governments to be much more creative as they seek to strengthen their economies.
While the G20 rapid-growth economies have been basking in consistent expansion, this growth has often been overly dependent on the global commodity price boom or on low-cost exports. Policy–makers in these countries must also take creative steps now to reduce vulnerabilities and safeguard the future of their economies.
And yet while governments are united in lauding the importance of entrepreneurship, in all G20 countries there is room for improving aspects of the environment in which entrepreneurs operate. This report outlines in detail where each G20 member’s areas of greatest potential improvement are, and recommends what should be done to realize that potential.
This report also goes further and emphasizes not only what governments can do, but also what entrepreneurs can do to seize opportunities presented by the environment in which they operate. Ultimately, the success of a country’s entrepreneurship environment will be judged by the number of leading entrepreneurs that emerge from it and the successful businesses they create. This report aims to be a useful tool for helping to increase that number.
Entrepreneurship drives economic growth
This report is our first barometer that examines entrepreneurship across the G20 group of large economies. Together, these economies are responsible for 75% of global GDP. They represent a diverse range of countries, and include both mature market economies and rapid-growth markets. This diversity is reflected not only in different growth paths and economic structures, but also in the degree to whichentrepreneurship thrives. The G20 countries have much to learn from each other’s experiences of how to encourage entrepreneurship. If they are successful in identifying the key lessons and learning from them, the boost to long-term economic growth will be very substantial.
An entrepreneur is someone who starts or accelerates a business — but entrepreneurs contribute more than just that to an economy. The economist Joseph Schumpeter saw the role of the entrepreneur as central to capitalist development, by providing new products, new production methods, new markets and new forms of organization, thereby acting as an agent of change. Indeed, the entrepreneur is someone who drives forward several factors that together stimulate economic growth — thereby helping to address governments’ fiscal challenges.
These factors include testing innovative technology, offering opportunities for young people, alleviating poverty and making a positive impact on society. Another key factor — perhaps the most critical one in today’s economic climate — is job creation.Small and medium-sized enterprises (SMEs) with less than 250 employees represented, on average, two-thirds of total employment in the OECD countries in 2007. And the European Commission showed in its SME Performance Review that the number of jobs in SMEs had increased at an average annual rate of 1.9%, while the number of jobs in large enterprises increased by only 0.8% between 2002 and 2008.
The crucial role of governments
While entrepreneurship is, by definition, a private sector phenomenon, G20 governments can influence the health of the entrepreneurial environment to create a fit, highperformance entrepreneurial economy that fuels growth.
This does not mean choosing winners and losers, but rather providing the right platform for growth through effective policies, regulation and incentives. This can range from providing incentives to lenders to fund SME growth, to working with the private sector to provide optimal training opportunities for entrepreneurs. Many G20 governments are already demonstrating leading practices, but all governments can still improve how they target additional areas of the entrepreneurship environment.
