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Students Zone - Answers to Case Study Questions

CASE STUDY 12.1: EUROPEAN AND US ENTREPRENEURSHIP ACTIVITY

1. Why is the level of entrepreneurship greater in the United States?

There are many factors that can be included here. The extent of state or government involvement in the EU may stifle the level of entrepreneurship (though the case study would have us believe the opposite). The fear of failure may be lower in the US as might be the stigma associated with bankruptcy. Entrepreneurship may be taught at an earlier age in the US as might the ideas of individual self-sufficiency. In Many EU countries the state is so big that many jobs opportunities are to be found there, therefore there is less need to set-up as a sole trader. The level of taxation and red tape may also be less in the US and the funding system for start-up and existing small firms may be better developed.

2. What policies have been put forward to stimulate the level of entrepreneurship in the European Union?

One set of policies that might be advocated would be to examine the policies in the US and consider whether these can be used in the EU. Reducing the level of red-tape and the level of interest rates faced by EU SMEs might help encourage entrepreneurial activity within the EU, as would an increase in the available of finance for SMEs at all stages of their business. Providing information and making sure that SMEs know that it exists and use it would also be beneficial to EU SMEs. Reducing the level of the state in the economy and promote entrepreneurship within schools may also be important. As the case study suggest the EU has sought to look at the ways the state can aid entrepreneurship rather than the approach of reducing the level of state involvement in the economy as generally pursued by the US. A range of the policy measures is shown on pages 362-365 of the text.

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