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Government Incentives for Entrepreneurship

In: Innovation and Public Policy

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  • Josh Lerner
Abstract
In the dozen years since the Global Financial Crisis, there has been a surge of interest on the part of governments in promoting entrepreneurial activity, largely by providing financing. This essay explores these policies, focusing on financial incentives to entrepreneurs and the intermediaries who fund them. The motivation for these efforts is clear: the well-documented relationships between economic growth, innovation, entrepreneurship and venture capital. Yet despite good intentions, many of these public initiatives have ended in disappointment. I argue that these failures have not simply been a matter of bad luck. Instead, the unfortunate outcomes have reflected the fundamental structural issues that make it difficult for governments to launch sustained successful efforts to promote entrepreneurship over sustained periods. I highlight several critical challenges, and outline two principles that might render these efforts more effective.
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Suggested Citation

  • Josh Lerner, 2020. "Government Incentives for Entrepreneurship," NBER Chapters, in: Innovation and Public Policy, pages 213-235, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14426
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    References listed on IDEAS

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    Cited by:

    1. Magnus Henrekson & Mikael Stenkula, 2024. "Bottom-Up Policies Trump Top-Down Missions," International Studies in Entrepreneurship, in: Magnus Henrekson & Christian Sandström & Mikael Stenkula (ed.), Moonshots and the New Industrial Policy, pages 309-331, Springer.
    2. Fini, Riccardo & Perkmann, Markus & Kenney, Martin & Maki, Kanetaka M., 2023. "Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system," Research Policy, Elsevier, vol. 52(1).
    3. Slavtchev, Viktor & Wyrwich, Michael, 2023. "The effects of TV content on entrepreneurship: Evidence from German unification," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 696-721.
    4. Chuantao Cui & Leona Shao-Zhi Li, 2024. "More but not better: Career incentives of local leaders and entrepreneurial entry in China," Working Papers 202417, University of Macau, Faculty of Business Administration.
    5. Matthew R. Denes & Sabrina T. Howell & Filippo Mezzanotti & Xinxin Wang & Ting Xu, 2020. "Investor Tax Credits and Entrepreneurship: Evidence from U.S. States," NBER Working Papers 27751, National Bureau of Economic Research, Inc.
    6. Naudé, Wim, 2020. "Entrepreneurial Recovery from COVID-19: Decentralization, Democratization, Demand, Distribution, and Demography," GLO Discussion Paper Series 631, Global Labor Organization (GLO).
    7. Viktor Slavtchev & Michael Wyrwich, 2017. "TV and Entrepreneurship," Jena Economics Research Papers 2017-007, Friedrich-Schiller-University Jena.
    8. Pontus Braunerhjelm & Roger Svensson, 2024. "Inventions, commercialization strategies, and knowledge spillovers in SMEs," Small Business Economics, Springer, vol. 63(1), pages 275-297, June.
    9. Karen G. Mills & Annie V. Dang, 2021. "Panel Remarks: Creating “Smart” Policy to Promote Entrepreneurship and Innovation," NBER Chapters, in: The Role of Innovation and Entrepreneurship in Economic Growth, pages 559-568, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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