Promoting entrepreneurship for growth

Digital businesses contribute up to eight percent of GDP in G20 countries and are growing rapidly. Digitalisation “is opening the door to new products, services and business models causing a continual change in the nature of innovation,” says EY in their latest report “Disrupting the disruptors”. According to the report, policymakers play a major role in stimulating entrepreneurship and enhancing it for the benefit of economic growth. In their report, EY analyses different aspects of the entrepreneurial ecosystem in G20 countries and developed eleven key policy recommendations to foster entrepreneurship.

To assess the strengths and weaknesses of entrepreneurial ecosystems, EY has developed the Digital Entrepreneurship Barometer. Focussing on five pillars of entrepreneurship, it aims at evaluating the relative performance and potentially helps to identify best practice policies:

Access to finance is a major hurdle for entrepreneurs. Therefore, the first pillar considered in the barometer is the access to financing including the availability of risk capital, lending options, and financial regulation. To ease business funding, EY advises countries to promote the development of early-stage financing and support schedules as well as reducing investment barriers to increase foreign capital for entrepreneurs. Canada, the United States, and Japan are the most advanced countries in this regard.

Second, EY looks at the entrepreneurial culture. If entrepreneurship is perceived as a real career option, more digital natives will start a business. To foster this view, entrepreneurship should be part of higher education and integrated into primary and secondary levels; industry should be engaged in providing training and intellectual property rights should be tailored for entrepreneurs. According to the report, the United States, Germany, and Japan are examples of a well-developed entrepreneurial culture.

Regarding the third pillar, the Digital Entrepreneurship Barometer assesses the digital business environment including regulation and taxation. The report shows that countries with a strong performance regarding hiring and firing practices, time to start a business and legal efficiency enhance entrepreneurship. Moreover, a clear and competitive tax code is fundamental to smooth business administration. The UK, Canada and the US have the most advanced business environment. Still, it could be enhanced using a G20 entrepreneur visa and with the establishment of clear guidelines on data privacy and security.

Fourth, digital skills and entrepreneurial education is a key. The opportunity to gain both technical and leadership skills support entrepreneurship in a digital environment, says the report. Teaching entrepreneurship in school and promoting entrepreneurship motoring programs and coaching programs can foster the entrepreneurial ecosystem. Currently, the United States, Japan and Australia are the leading G20 countries regarding their entrepreneurial education.

Finally, the barometer evaluates the digital knowledge base and ICT market especially in regards to the coordinated support available for entrepreneurs. EY advises countries to foster more multi-stakeholder clusters and networks at different levels including sector- and city-level focused schemes. Moreover, more university support for entrepreneurs through government incentives will also improve the ecosystem. Prime examples for coordinated support are the US, the UK and Germany.