Government leaders around the world are hoping that business start-ups will fuel economies still struggling since the global financial crisis. To stimulate such growth, policymakers are shaping programs to promote the development of new business ventures. What incentives are most effective for stimulating entrepreneurship? What countries are leading the way for new business growth?
A study by Professor Stuart Read at IMD business school in Switzerland argues that offering entrepreneurial mentoring programs is the most important factor for people considering starting a business. Potential entrepreneurs also perceive the value of access to health care higher than the actual financial cost of providing it. By focusing on incentives with perceived benefits outweighing actual costs, Read believes that governments can limit the financial burden of helping new businesses while encouraging more people to become entrepreneurs.
An article by Edward L. Glaeser, a professor of economics at Harvard University, says that the best tool for reducing unemployment is helping entrepreneurs to tackle new problems and create new industries as Henry Ford once did with the modern automotive industry. In 2005, 3 million jobs in the United States were added by brand-new firms, while old businesses actually caused a net reduction of 850,000 jobs. According to Glaeser, one of the most powerful mechanisms for promoting entrepreneurship in a region is education. Forming charter schools and public universities will spark the intellectual development that leads to new business ventures. Rather than bailing out old struggling industries, the government should focus on supporting industries of the future.
Canada was recently named the best country in the G20 for small business owners and entrepreneurs. Experts attribute this ranking to educational quality, low tax burdens, opportunities to collaborate, and an overall protective environment for entrepreneurs. Canada averages nine new businesses each year for every 1000 people, ranking second in the world behind the United Kingdom. With a very simple registration process that only takes five days to start a new business, entrepreneurship has become an essential part of the Canadian business culture.
With struggling economies all around the world, new approaches to job creation should center on the promotion of entrepreneurship. While some business ventures may fail, those that succeed have the potential to revolutionize industries for hundreds of years. Jobs and wealth creation will rise out of the enormous growth potential of innovative new companies. World governments may take a variety of approaches to supporting entrepreneurs, but they will gladly reap the economic rewards of those who find success.