Lecture 10 Flashcards
1
Q
What was the view on small businesses in the past?
A
- seen as inefficient, lacking information and shrinking share of economy
2
Q
What are reasons to support SME’S?
A
- contribute to job creation (though 4% of firms provide 50% of jobs)
- contribution to economic development (take advantage of knowledge spillovers, replace inefficient businesses, threaten existing businesses)
3
Q
What are the sustainability and political advantages of SME’s?
A
- provide choice and variety to consumers
- support local communities
- acts as agent of social change
4
Q
What is market failure?
A
Market failure exists when the competitive outcome of markets is not satisfactory from the point of view of society
5
Q
Why does market failure occur?
A
- lack of competition (e.g. oligopoly in rail)
- information imperfections
- presence of externalities where the true costs and benefits of a product are not taken into account
6
Q
How can governments intervene?
A
- entrepreneurship promotion (e.g. global entrepreneurship week)
- entrepreneurship education
- barriers to entry and exit (e.g. taxation)
- start-up support
- seed financing (Microfinance)
7
Q
What are business incubators?
A
Business incubators are organizations geared toward speeding up the growth and success of startup and early stage companies
8
Q
What are the 4 advantages of business incubators?
A
- shared office accommodation
- shared support services
- advice and assistance
- network availability
9
Q
What are grants?
A
money provided to businesses to correct equity imbalances and to support business growth
- limited evidence of job creation
10
Q
What are the 5 policy choices that need to be made?
A
- WHO delivers the product… private, public or quasi?
- What TYPE…generic, standard, regulated?
- How is it RATIONED…time, sector, price, market segment?
- How is it INTEGRATED…into other economic or social programmes?
- How is it FUNDED…by charges, donations, public funds?
