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Is European Entrepreneurship in Crisis?

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  • Naudé, Wim

    (University College Cork)

Abstract

The European Commission has adopted an Entrepreneurship 2020 Action Plan as its answer to challenges brought by the gravest economic crisis in the last 50 years. Governments of European countries all habour high expectations that entrepreneurship will contribute towards ending the continent's economic malaise. In this article I argue that these expectations may be disappointed because (i) entrepreneurship promotion is a last-resort policy, (ii) entrepreneurs are being overestimated, and (iii) entrepreneurs are too often allowed to capture policy. These reasons are indicative that that in addition to its euro and refugee crises, Europe is suffering from an entrepreneurship crisis. Entrepreneurs are increasingly older and are faring less well in terms of earnings compared to wage earners. Small businesses are not creating sufficient jobs, they are not raising labour productivity, and immigrant-entrepreneurs are not productively assimilated. Big businesses are largely a legacy of the past, and resorting more and more to lobbying. When they innovate it is often to replace labour. Hence, given that Europe faces rising unemployment, growing numbers of unassimilated migrants, and more pensioners - and all in the face of stagnating productivity growth - the conclusion is that entrepreneurs have failed to reduce the dependency burden on those who do work. This puts immense strain on European public finances that are already fragile after the financial crisis. Demographic changes and institutional shortcomings are thus at the core of the entrepreneurship crisis in Europe.

Suggested Citation

  • Naudé, Wim, 2016. "Is European Entrepreneurship in Crisis?," IZA Discussion Papers 9817, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9817
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    Cited by:

    1. Gascón Salillas, Patricia, 2020. "La actividad emprendedora: Análisis transversal en la Comunidad Foral de Navarra [Entrepreneurship activity: Cross-sectional analysis in the Region of Navarra]," MPRA Paper 99386, University Library of Munich, Germany.
    2. Molina, Jose Alberto & Velilla, Jorge, 2016. "La innovación como determinante pare el emprendimiento [Innovation as determinant of entrepreneurship]," MPRA Paper 71471, University Library of Munich, Germany.
    3. Cristian E Villanueva & Adrianela Angeles & Luz Cecilia Revilla, 2018. "Tying Strong Ties In Informal Entrepreneurship: A Constraint Or An Entrepreneurial Driver?," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-19, March.

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    More about this item

    Keywords

    entrepreneurship; Europe; development;
    All these keywords.

    JEL classification:

    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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