EUROPEAN PERSPECTIVES OF WESTERN BALKANS

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EUROPEAN PERSPECTIVES OF WESTERN BALKANS

• ENTREPRENEURSHIP AND SME case of Croatia
• Slavica Singer
• CEPOR, Zagreb, Croatia

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Basic question and answer

• Q How to survive in a globalized world?
• A To develop an enterprising society of
• Empowered individuals
• Ethical businesses
• Fair government
• Active civil society,
• able to compete and cooperate.

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Need for change...

• In looking at problems
• Connected, not isolated
• In seeking solutions
• Entrepreneurial (holistic, opportunity driven)
• In policy approach
• from traditional macroeconomic view to growth
  theory of firm
• In definition of stakeholders
• Individuals, firms, government, civil society

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How to find best answers?

• To know own situation
• To know what is going on around you
• To know what you want to achieve

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Croatia now... 1

• unemployment, high and persistent
• 16 ILO - 1991-2003
• symetric change in structure of employment
  1990-2000
• Doubled in small enterprises
• Halved in large enterprises
• regional development imbalances
• 1 to 6, in GDP/capita, TEA index

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Croatia now... 2

• low competitiveness
• low entrepreneurial activity
• low profitability of SMEs
• high corruption

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Competitiveness 1

• Growth Competitiveness Index
• Croatia
• from 53.(2003) to 61.(2004)
• Bulgaria
• from 64. (2003) to 59.(2004)
• economic growth in long run
• technology
• public institutions
• macroeconomic environment

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Competitiveness 2

• Microeconomic Competitiveness Index
• Croatia
• from 62. (2003) to 67. (2004)
• Bulgaria
• from 77. (2003) to 70. (2004)
• sustainable level of productivity
• company operations and strategy
• quality of the national business environment

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indices
TEA total entrepreneurial activity
(start-up) opportunity vs. necessity FEA
firm entrepreneurial activity (growth
potential) more than 20 employed after 5
years, new products, new technology


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Croatia vs World (1)
2002-2003 avg 41 countries Entrepreneurial
activity (TEA) World 9.9 vs. Croatia
3.10 (41.) Slovenia 4.30 (35.) Growing
businesses (FEA) World 2.0 vs. Croatia
1.12 (36.) Slovenia 2.70 (7.)



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Croatia vs World (2)
of employment in growing businesses World 1
2.3 vs. Croatia 4.5 (39.)
Slovenia 17.1 (7.)



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Why the interest in growth firms?

• employment creation
• targeting on winners' and quality
• the middle business structure argument
• better returns to investment - long term
• better returns to public efforts
• growth sector development concern
• high tech development concern
• developing export potential

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Values

• Self-employment desirable career?
• 58 yes
• Entrepreneurs have high social status?
• 48 no, 28 yes, 24 do not know
• Media present success stories?
• 48 no, 40 yes

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Entrepreneurs are born, not made?

• No, education matters.
• Those with more education are more likely to
  pursue opportunity entrepreneurship more
  benefits for national growth
• 11.96 TEA (with knowledge and skills)
• vs.
• 0.21 TEA (without knowledge and skills)

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Uneven distribution of optimism...

• Zagreb Slavonia
• Entrepreneurial intentions? 9.6
  2.5
• Business opportunity? 20.4
  10.3
• Have knowledge? 41.5
  16.9
• Entrepreneur
• good career? 60.3 43.8

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What is going on in EU...

• Entrepreneurship in Europe, green paper, 2003
• Charter for Small Enterprises, 2000 Croatia
  signed in 2003

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What Croatia wants to achieve?

• Goals (2004-2014 time horizon)
• Sustainable growth of GDP (55-60 of EU GDP) 5
  annual growth of GDP
• Lowered unemployment 8
• Increased social inclusiveness
• National Council on Competitiveness
• 2004.

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Many surveys agree on obstacles...

• Education
• Administrative barriers
• Government policies/programs
• Cultural and social norms

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But small businesses ask for...

• Taxation policy
• Technological capacity
• Better legislation
• Better representation

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Government is focusing on...

• Developing institutional infrastructure for
  enhancing entrepreneurship
• Clusters, centers for entrepreneurship, business
  incubators, business zones...
• Subsidized loan programs
• Training services for start-up entrepreneurs

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But not enough on... 1

• Elimination of administrative barriers
• No silent approval
• Time to register property 956 days, EU15 48,
  Bulgaria 19
• Time to start a business 49 days, EU15 31,
  Bulgaria 32
• Costs to go through insolvency 26.1 of estate
  (recovery rate), EU15 70.2, Bulgaria 34.2

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But not enough on... 2

• Education
• Upgrading policy capacity in government
• Suffocating in operational programs
• Businesses with growth potential
• Development of non-traditional financial
  instruments
• Equity, business angels...

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Concluding questions

• Who are listening to whom?
• Do stakeholders have capacity to communicate?
• Do stakeholders have entrepreneurial capacity for
  change?

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Recommendations

• To work on developing capacity for
• Listening
• Communicating
• Changing
• among all stakeholders (individuals, firms,
  government, civil society) in order to develop
  consensus on URGENT NEED FOR CHANGE
• To identify common international perspective on
  progress in entrepreneurship and SME
• Global Entrepreneurship Monitor project?

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CEPOR - SME Policy Center

• Centar za politiku razvoja malih poduzeca CEPOR
• Contact details
• Trg J.F. Kennedy 7/I
• HR-10000 Zagreb, Croatia
• Phone [phone]
• Fax [phone]
• www.cepor.hr
• E-mail cepor_at_zg.htnet.hr

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CEPOR founders

• Croatian Chamber of Commerce
• Croatian Chamber of Crafts
• Institute for International Relations, Zagreb
• Economic Institute, Zagreb
• J.J. Strossmayer University in Osijek, Faculty of
  Economics, Osijek
• Istrian Regional Agency, Pula
• Center for Entrepreneurship, Osijek
• Medjimurje Entrepreneurship Center, Cakovec
• Open Society Institute-Croatia
• Association of Croatian Institutions for
  Promoting Entrepreneurship

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Contact details
Slavica Singer Director CEPOR SME Policy
Center e-mail singer_at_efos.hr