Public Policies to Promote Entrepreneurship

The aim of this chapter is to consider government policies to encourage entrepreneurial activity. Generally such policies have focused upon aiding new and small businesses, although as discussed in Chapter 8 various policies have tried to increase entrepreneurial behaviour in the government and ‘not-for-profit’ sectors. The first question is why should governments intervene in the market to support new or small firms? The importance of entrepreneurship generally, and of new and small firms in terms of employment in particular, was discussed in Chapter 2. As was seen in earlier chapters some theories suggest that a rise in entrepreneurship will help the economy move towards equilibrium. Alternatively other writers argue that entrepreneurship may result in greater disequilibrium forces (Chapters 3–4).