Entrepreneurship as Key to Economic Growth

Although unemployment in the euro area is expected to reach its lowest level since 2009, self-employment is gaining traction, particularly amongst the youth

The euro area economy is expected to grow at its fastest pace in a decade. According to the latest projections of the European Central Bank (ECB) staff, the 19-nation Eurozone will see real gross domestic product (GDP) growth of 2.4 % in 2017, higher than the European Commission’s autumn forecast and the ECB’s September forecast of 2.2 %.

Mario Draghi, the ECB’s president, recently highlighted the significant improvement in the growth outlook and said the ECB’s projections have been revised up “substantially”. The ECB staff now expects the Eurozone’s economy will grow by 2.3 % in 2018, a big increase from the 1.8 % growth projected in September. There have also been employment gains. According to Eurostat, the statistical office of the European Union (EU), the number of persons employed increased by 1.7 % in the euro area (EA19) in the third quarter of 2017 (year-on-year). Eurostat also estimated that, in the third quarter of 2017, 156.3 million men and women were employed in the euro area – the highest levels ever recorded. Unemployment in the euro area is expected to average 9.1 % this year, its lowest level since 2009, as the total number of people employed climbs to a record high, according to the European Commission’s Autumn 2017 Economic Forecast.

Such figures, however, hide significant differences across Member States, particularly among the youth. The Eurostat figures show that in September 2017, 3.735 million young persons (under 25) were unemployed in the EU28, of whom 2.656 million were in the euro area. In the same period, the youth unemployment rate was 18.7 % in the euro area, compared with 20.4 % in September 2016. In September 2017, the lowest rate was observed in Germany (6.4 %), while the highest were recorded in Greece (42.8 % in July 2017), Spain (37.2 %) and Italy (35.7 %).

Supporting growth

As Europe continues its recovery after one of the worst economic crises in many generations, supporting growth has become even more important. Promoting entrepreneurship and self-employment has been a key element of the EU’s Europe 2020 strategy since 2010, for achieving smart, sustainable and inclusive growth. As pointed out by the European Commission, “entrepreneurship is a powerful driver of economic growth and job creation.”

The European Commission adopted an Entrepreneurship 2020 Action Plan at the beginning of 2013, designed to stimulate and reignite the entrepreneurial spirit across the EU and to remove obstacles so that more entrepreneurs are encouraged to start a business. The plan is built on three main pillars:

  • Entrepreneurial education and training to support growth and business creation;
  • Creating an environment where entrepreneurs can flourish and grow, by removing existing administrative barriers and supporting entrepreneurs in crucial phases of the business life-cycle;
  • Reigniting the culture of entrepreneurship in the EU and nurturing the new generation of entrepreneurs, developing role models and reaching out to specific groups whose entrepreneurial potential is not being fully tapped (for example, women)

As part of its strategy to stimulate entrepreneurship and encourage cross-border trade in Europe, the European Commission launched the Erasmus for Young Entrepreneurs (EYE) programme in 2009, following an initiative of the European Parliament.

It is a cross-border exchange programme which gives new or aspiring entrepreneurs the opportunity to learn from experienced entrepreneurs running small and medium sized businesses in Europe. According to data published by Eurochambres, the Association of European Chambers of Commerce and Industry, since the programme’s launch, 4,520 exchanges have been established, involving new and experienced entrepreneurs from across the EU Member States and the participating countries part of COSME, the EU programme for the competitiveness of Small and Medium-sized Enterprises (SMEs). The European Commission’s goal is to organise 10,000 exchanges by 2020. The same data shows Spain and Italy are the most popular destinations among both new entrepreneurs and host entrepreneurs.

Success stories and additional steps

In fact, there are several success stories involving cooperation between these two countries as well as others across the EU. A 2014 report prepared by Eurochambres for the European Commission showed that 87 % of the start-ups founded by the entrepreneurs who have participated in the EYE programme are still in business – while the average survival rate of start-ups after three years in Europe is only 57 %. According to the same report, of the experienced entrepreneurs who have taken part in the programme, 65 % have extended their operations inside or outside the EU, and 53 % have actually implemented new ideas to develop new products or services since their participation.

The European Commission also has several other initiatives to support start-ups.  In November 2016, it adopted a communication on “Europe’s next leaders: the Start-up and Scale-up Initiative”. In addition, it announced that it would extend the Erasmus for Young Entrepreneurs Programme to entrepreneurs in international markets, more specifically to the USA (maximum two U.S. States), Israel and another country in Asia selected from Singapore, Taiwan and South Korea.

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Ayse Ferliel Barounos

Media professional with 20+ years of experience at several organisations including Financial Times Group, Dow Jones Newswires and Wall Street Journal.

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