1. ifm
INSTITUTE FOR APPLIED RESEARCH
IN FACILITY MANAGEMENT
institute.fm@gmail.com
REPORT
FOR THE DEVELOPMENT OF THE DRAFT OF THE
FINAL COMMUNIQUE
OF THE G20 YOUNG ENTREPRENEURS’
ALLIANCE SUMMIT – 2013
3. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
2
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
TABLE OF CONTENTS
PRODROME....................................................................................................................................................................................3
SMALL AND MEDIUM-SIZED BUSINESS WORLDWIDE – STATISTICAL OVERVIEW.......................................................................6
DEFINITIONS ..................................................................................................................................................................................6
STATISTICS RESULTS ......................................................................................................................................................................7
YOUTH IN SMALL AND MEDIUM-SIZED BUSINESS .....................................................................................................................11
SMES AND YOUTH ENTREPRENEURSHIP ARE THE KEY DRIVERS OF THE GLOBAL ECONOMY ..................................................14
RECOMMENDATIONS ..................................................................................................................................................................15
1. INFRASTRUCTURE....................................................................................................................................................................15
1.1 QUESTIONNAIRE RESULTS ANALYSIS – INFRASTRUCTURE...................................................................................................16
1.2 RECOMMENDATIONS ............................................................................................................................................................16
1.3 REPRESENTATIVE EXAMPLES OF GOOD SOLUTIONS IN INFRASTRUCTURES REALM ..........................................................17
2. EDUCATION FOCUSING ON THE RIGHT SKILLS FOR YOUNG PEOPLE .....................................................................................19
2.1 QUESTIONNAIRE RESULTS ANALYSIS – EDUCATION ............................................................................................................20
2.2 RECOMMENDATIONS ............................................................................................................................................................20
2.3 REPRESENTATIVE EXAMPLES OF GOOD SOLUTIONS IN EDUCATION AND BUSINESS NETWORKS REALM.........................21
3. BUSINESS AND LABOR LEGISLATION ENVIRONMENT ............................................................................................................25
3.1 QUESTIONNAIRE RESULTS ANALYSIS – BUSINESS AND LABOUR LEGISLATION ENVIRONMENT ........................................26
3.2 RECOMMENDATIONS ............................................................................................................................................................26
3.3 REPRESENTATIVE EXAMPLES OF INCENTIVE LABOUR LEGISLATION PROGRAMMES..........................................................27
4. ACCESS TO FINANCE ................................................................................................................................................................29
4.1 QUESTIONNAIRE RESULTS ANALYSIS – ACCESS TO FINANCE...............................................................................................29
4.2 RECOMMENDATIONS ............................................................................................................................................................31
4.3 THE LIST OF VARIOUS ORGANIZATIONS, CENTERS AND FOUNDATIONS, WHICH ADDRESS DIFFERENT TYPES OF SUPPORT
FOR SMES AND YOUTH ENTREPRENEURSHIP.............................................................................................................................31
CONCLUSION REMARKS ..............................................................................................................................................................35
4. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
3
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
PRODROME
We are the State!
In 2013, G20 Summit will be held in St. Petersburg (Russia). Opening of the Summit will take
place on the 5th of September.
Centuries earlier, on the 5th of September Louis XIV was born - a strong supporter of the
principle of absolute monarchy and the divine right of kings, who is credited with the phrase "I
am the state!".
In honor of the birth of the future Sun King Tommaso Campanella wrote his last work - Latin
panegyric poem. This man was one of the first representatives of utopian socialism, author of
the famous work "The City of the Sun." Such as the City of the Sun, Campanella wanted to see
the world and predicted a future "world state."
The G20 Summit brings together the most systemically important economies of the different
countries, different levels of economic development, leading international financial
organizations interested in the collective decision pertaining to the major world economic and
financial problems. Forum member economies together represent 90% of global GDP, 80% of
world trade and two-thirds of the world population.
The main objectives of the summit are the followings: prevention of the global recession;
deflation; strengthening the financial sector and prevention of the protectionism; development
of the global financial and economic system; and measures to put the global economy on a
path to sustainable growth.
In times of economic instability of recent years, developed countries of the world were offered
to concentrate on supporting the poorest and most vulnerable people in developing countries,
as well as on financing of infrastructure projects that form the basis for economic growth and at
the same time provide employment issues.
The main message of the G20 in 2012 stated that each country can do whatever it considers
necessary, in order to achieve its own internal purposes, but at the same time shall minimize
the impact of these measures on other countries. This suggests that G20 leaders – “pre-world
state» - expressed a desire to seek "common good".
There is no doubt that in times of systemic crisis of the global economy there is a strong need
for development of the global action plan, and a clear desire to implement it. Not with reason,
classics in the universities do not stop studying intensively works of Plato - one of the first
authors who presented to the world his vision of the “Ideal state”, while economists involved in
building models, inadvertently keep referring to the "Platonic" ideal.
What is important is that the greatness and scale of the objectives are not to crush average
person, but to protect him/her. It is important that rational logic of global planning calculations
leave room for personal projects and unpredictable human creativity.
Recently, humanity has survived the age of the masses, conveyors and standards. But,
technological development allows individualization of production, targeting it to specific
consumers, be it of goods or services. There is a global shift in relation to small and medium
business, if not in reality, then in a public inquiry.
5. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
4
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Today, at a crucial stage of the crisis, which dominates throughout the civilized world,
entrepreneurship is one of the important issues.
We are witnessing challenges associated with the emergence of new technologies, which
require a review of legal and institutional frameworks and adjusting accordingly the
organization of economic activity.
Rationally organized mass production still remains the basis of our economy. But, more and
more people want to be heard in the uniqueness of their requests. New technologies can
already do it. It is time to be closer to customers, and not hide behind the thick walls of
corporate apparatus and intermediaries.
These developments lead to the need to promote structural modernization, provide high-tech
jobs, support innovation and stimulate domestic demand, which is an increasingly important
factor for investment decisions.
The government machinery and the monopolies from their heights will not notice a unique
person with his/her unique needs. But there is free enterprise, which allows for the realization
of a free and at the same time culturally determined will of the individual. Entrepreneurs are
very different, but always aim at finding effective solutions.
That is why we suppose that development of the human capital is main factor in the formation
and development of innovative post-industrial economy relevant in all G20 countries.
Entrepreneurship, especially youth entrepreneurship, describes mobility of thinking and lack of
stereotypes, which are the qualities that play a crucial role in the development of economies.
G20 countries have different technological and institutional environments, geographical
conditions, levels of consumption and trade, monetary and credit systems. These differences
serve as an incentive to entrepreneurs, stimulating cross-border cooperation, improvements
and job creation.
Support and development of SMEs is a factor of stability of the velocity of money and the
financial liquidity of the global economy.
One of the major concerns of modern economy is structural unemployment, in particular
among young people. Access to new forms of production is limited. Entrepreneurship is a tool
that provides targeted support for those who are currently unemployed or underemployed and
have high potential in the innovation economy.
Promotion of youth entrepreneurship is a significant factor in the reduction of social risks and,
therefore, the risks of the global economy.
Structural changes.
A structure is defined by purposes and tasks that are set for all participants. Today, structural
changes are combined with the formation of a new regulatory model, and include the following
processes:
6. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
- Strengthening of supranational institutions within the framework of regional integration
(European Union, Customs Union and the "EurAzEs"), internationalization, and at the
same time de-nationalization of the global economy;
- Distribution of a planned approach (targeting and decisions) regarding the formation of
the global governance system adequate to the level of globalization of financial markets.
It is important to consider the impact of monetary policies that encourage long-term
investment of resources in the economies, necessary for economic growth that will help the
development of small and medium-sized businesses, while minimizing social risks and
separatist sentiment in developed and developing countries in the period of transition.
Entrepreneurship affects the development of local labor markets, which is an important aspect
of an efficient economic system and contributes to the strong, sustainable and balanced
growth, declared as a priority by G20 leaders.
Human capital is a basis of entrepreneurship. It acts as an obvious priority for social and
economic policies of the G20. However, recognition of this fact is not enough for a qualitative
leap in the development.
It is time for profound changes in many sectors of the economy on the principles that bode well
with the modern post-industrial challenges.
These challenges are not specifically Russian. Creating a modern, efficient system of human
development is actual for all developed countries. At the present stage of development,
dominant market position can be achieved by companies, which along with other assets
effectively use intellectual capital - the human factor.
Moreover, the country that will be able to form a modern, efficient model of human capital
development, will receive a huge advantage in the post-industrial world, since the industry's
human capital represent a zone of interaction not only social, but also fiscal, investment and
political problems.
In 2013, G20 Countries will convene in St. Petersburg.
This city was founded as the capital of an Empire, and on the day when the previous Empire -
Eastern Roman (Byzantine) Empire had been destroyed. There are 250 years between
capitulation of the Constantinople and foundation of the St. Petersburg. This is a reminder of
how significant was the idea of translation imperii for the western mind - the idea, which came
from Virgil and the Biblical book of Daniel, and inspired Charlemagne and Peter I. It were
attempts to find unity in many ways, the project global and supranational.
Often these projects are fraught with frustrations in utopianism, and in a brutal revenge against
the gnarly world between utopian dreamers, who fell greedily to power.
Today, we are witnessing the new reincarnation of the ancient idea of universalism. And, of
course, we worry about, will not this utopia be its own antipode.
Small and medium sized entrepreneurship is an indicator of the "boundaries of patience",
which are defined by the socio-political and institutional climate. Business is one of the key
drivers of the global economy.
7. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
6
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
SMALL AND MEDIUM-SIZED BUSINESS WORLDWIDE – STATISTICAL
OVERVIEW
DEFINITIONS
Small and Medium-Sized Business
The European definition: SME employs less than 250 people. For statistical purposes, SMEs are
generally defined as those enterprises employing fewer than 250 persons. Small and medium-
sized enterprises with 1 to 249 persons employed are divided into:
Micro enterprises: with less than 10 persons employed
Small enterprises: with 10 to 49 persons employed
Medium-sized enterprises: with 50 to 249 persons employed
The American definition:
Micro enterprises: the most widely used American definition of micro-business by the number
of employees is the same of that of European Union: less than 10 employees
Small enterprises: with less than 100 persons employed
Medium-sized enterprises: with less than 500 persons employed.
Non-financial economy:
Sectors of economy, which include:
industry,
construction,
distributive trades (motor trades, wholesale and retail trade) and
non-financial services)
Role of young entrepreneurs
It is younger entrepreneurs who are driving growth, innovation and job creation. Global
research shows that 25-35 year olds have the highest rates of entrepreneurial activity (GEM,
2012). Productivity among young people brings disproportionally positive effects in terms of
economic growth and social stability that are cumulative and intergenerational (WDR, 2007).
Especially in the current climate, demographic and labor market trends indicate that support
directed at young people will be a key determinant of future prosperity.
8. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
7
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
STATISTICS RESULTS
European Union
SMEs have been considered one of the ‘driving forces’ of modern economies due to their
contributions in terms of technological upgrading, product and process innovations,
employment generation, export promotion, etc.
The overwhelming majority (99.8%) of enterprises active within the EU-27 are micro, small and
medium sized enterprises. Some 20.7 million enterprises contribute 58.7% of the value added
generated within the EU-27 non-financial business economy. More than nine of ten (92.2%)
enterprises are micro enterprises (employing less than ten persons) and their share of value
added within the non-financial business economy (excluding mining and quarrying) is 21.3%
(Eurostat Pocketbooks. “Key features of European business with a special feature on SMEs”,
2011).
Some 6.5 per cent of SMEs in the EU are classified as small enterprises (employing between 10
and 49 people) and 1.1 per cent are medium-sized (50-249 employees). Large businesses,
with more than 250 employees, account for just 0.2 of enterprises in the EU’s non- financial
sector. (Ecorys, “EU SMEs in 2012: at the crossroads”. Annual report on small and medium-sized
enterprises in the EU, 2011/12)
In employment terms, SMEs provided an estimated 67.4 per cent of jobs in the non-financial
business economy in 2012. With more than 87 million persons employed the EUs SMEs account
for 58.6 % of gross value added generated by the non-financial business economy.
The performance of SMEs across the EU is measured with the help of four main indicators: the
number of enterprises, their output via their gross value added (GVA), the number of employees
on their payroll and apparent labor productivity.
9. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Number of enterprises, employment, gross value added and labor
productivity in EU-27, by size-class, 2012 (estimates)
Micro Small Medium All SMEs Large Total
Number of
enterprises
Number 19,143521 1,357,533 226,573 20,727,627 43,654 20,771,281
% 92.2 6.5 1.1 99.8 0.2 100
Employment
Number 38,395,819 26,771,287 22,310,205 87,477,311 42,318,854 129,796,165
% 29,6 20,6 17,2 67,4 32,6 100
Gross Value
Added
EUR Million 1,307,360.7 1,143,935.7 1,136,243.5 3,587,540 2,591,731.5 6,179,271.4
% 21.2 18.5 18.4 58.1 41.9 100
Apparent
labor
productivity*
Relative to
total, %
75.3 90.5 105.3 87.8 124.5 100
Source: Ecorys, “EU SMEs in 2012: at the crossroads”. Annual report on small and medium-sized
enterprises in the EU, 2011/12
* Source: (Eurostat Pocketbooks. “Key features of European business with a special feature on
SMEs”, 2011)
The number of SMEs across the EU-27’s non-financial business economy is particularly
concentrated within distributive trades, manufacturing and construction. These three activities
provide work to 61.9 % of the non-financial business economy workforce in SMEs (Eurostat
Pocketbooks. “Key features of European business with a special feature on SMEs”, 2011).
As with the employment analysis, SMEs within the EU-27’s distributive trades, manufacturing
and construction sectors generate the highest levels of added value. Across the whole of the
EU-27’s non-financial business economy, SMEs account for 58.1 % of the generated value
added (Ecorys, 2012).
USA
It is well known fact that SMEs contribute significantly to the development and growth of
efficiency in the U.S.A. particularly to innovation, job generation, and international
competitiveness.
Three key US small business performance indicators include:
Number of SMEs
Share of employment
10. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Share of the total annual revenue
Firms and Employment in the United States by Firm Size, 2008
(Nonfarm, Nonemployer firms excluded)
Total (SMEs &
Large)
SMEs
(Number of
personnel:
1 – 19)
SMEs
(Number of
personnel:
20 – 499)
SMEs Total
(Number of
personnel: 1 - 499)
Number of
enterprises
(thousands)
5,930.1 5,295.0 616.7 5,911.7
Number of
enterprises (%)
100% 89.3% 10.4% 99.7%
Employment
(thousands)
120,903.6 21,461.7 38,232.3 59,694.0
Employment (%) 100% 17.8% 31.6% 49.4%
Source: U.S. Dept. of Commerce, Bureau of the Census, Statistics of U.S. Businesses.
SMEs represent 99.7 percent of all employer firms and employ about half of all private sector
employees. Of the 120.9 million nonfarm private sector workers in 2008, small firms employed
59.7 million and large firms employed 61.2 million. About half of small firm employment is in
second-stage companies (10-99 employees), and half is in firms that are 15 years or older. Small
and medium businesses generated more than a half of the nonfarm private GDP, made up 97.5
percent of all identified exporters and produced 31 percent of export value in FY 2008 (U.S.
Dept. of Commerce, Census Bureau and Intl. Trade Admin).
The services sectors are the most important for SME economic activity, accounting for 59.0
percent of SMEs’ contribution to GDP. According to U.S. Bureau of the Census (2010) the
wholesale and retail trade sectors combined accounted for the largest share of SME GDP (15.3
percent), followed by real estate (11.6 percent) and professional, scientific, and technical
services (11.1 percent). Manufacturing (combined with mining) ranked fourth among the
economic sectors, accounting for 11.0 percent of SME GDP in 2004, followed by construction
(10.0 percent).
11. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Regions of Asia
According to Department of statistics of Malaysia, the economic growth in developed countries
such as Japan, Korea, Taiwan and many others, was significantly generated by SME activities.
The percentage contribution of SMEs to Gross Domestic Product (GDP/Total Value Added)
ranges from 60.0 percent in China, 55.3 percent in Japan and 50.0 percent in South Korea
(Conference Proceeding: ASEAN Entrepreneurship Conference 2012).
The number of SMEs in the proportion of the total number of enterprises in South Korea
exceeds 99.9%.
More than 87% of jobs in South Korea come from small and medium businesses.
Regions of Latin America
Brazil still faces many challenges. SMEs play a crucial role in Brazil’s prospects for a more
equitable society. SMEs represents 99% of all companies, and are responsible for 66% of jobs in
the country. In 2007, for the first time, the number of entrepreneurial activities motivated by
opportunity surpassed the number motivated by necessity. Nonetheless, only 3% of
entrepreneurs expect to employ more than 20 people after five years of operation, while thw
worldwide averages 9%.
12. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
11
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
YOUTH IN SMALL AND MEDIUM-SIZED BUSINESS
Youth unemployment is one of the crucial social and economic challenges of this decade in
Europe and around the world. The unemployment rate in the European Union (EU), as a whole,
reached 9.8 % in November 2011, and the unemployment rate for youth (those under the age
of 25) in the European Union stood at more than 22 % in November 2011: approximately five
million unemployed young (OECD/European Union, Policy Brief on Youth Entrepreneurship,
2012).
Annual and monthly youth unemployment rates in US, EU and selected OECD countries (aged
less than 25)
Unemployment rate (%)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Nov
2011
USA 10.6 12.0 12.4 11.8 11.3 10.5 10.5 12.8 17.6 18.4 16.8
EU (27
countries)
17.7 18.3 18.8 19.2 18.8 17.5 15.7 15.8 20.1 21.1 22.3
OECD 12.4 13.4 13.8 13.7 13.4 12.6 12.0 12.7 16.7 16.7 -
Source: Data for European Union Member States and European average from Eurostat, “Labor
Force Survey”; Data for Canada, U.S. and OECD average from OECD Statistics, “Labor Force
Statistics".
Youth entrepreneurship is not a magic wand for solving the youth unemployment problem, but
it is one of the possible approaches to the task.
The European Commission’s Eurobarometer conducted a survey across Europe and other
industrialized countries in 2009 to learn about the individual’s attitudes towards self-
employment and business start-up (The EC’s Eurobarometer, Entrepreneurship in the EU and
beyond, Analytical report, 2009).
The most effective response has obtained in the United States of America and China, where
36% and 49% of people saw self-employment as ‘very’ or ‘quite feasible’ in the next five years.
Just 3 in 10 non-self-employed EU citizens thought that it was possible for them to get self-
employed in the next 5 years (8% “very feasible” and 21% “quite feasible”).
In South Korea and Japan respondents were less likely to think that it was very or quite feasible
to grow self-employed in the near future. Just 12% of Japanese and 22% of South Korean
respondents saw self-employment as a possibility.
It is surprising that the more people are educated, the less likely they are to consider starting
their own business, as they tend to be more aware of the underlying risks. This implies that
widening the opportunities for young people to participate in entrepreneurship education may
prove useful as it could help individuals become less risk adverse (European Employment
Observatory, Workshop on Youth and Self-Employment, 28 November 2011, Brussels, Belgium).
13. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
The attitudes to the feasibility of self-employment in the EU cut off with age. The two youngest
age cohorts (15–24 and 25–39) appear to have the highest level of enthusiasm for self-
employment with 40 % and 42 %, respectively, responding that self-employment in the next
five years was either ‘very feasible’ or ‘quite feasible’, much higher than the figures for the 40–
54 and “more than-55” cohorts (29 % and 13 %, respectively). This suggests that younger
cohorts in the population may provide the most potential for entrepreneurship. This is
consistent with another question asked in the Eurobarometer survey about whether
entrepreneurs are job creators. The youngest cohort (aged 15–24) agreed most strongly
(Eurobarometer, 2009).
Youth-operated businesses are more likely to be concentrated in certain industries with low
barriers to entry and low capital requirements such as information and communication and
other services: 12.4 % for youth compared with 7.6 % for adults (OECD/European Union, Policy
Brief on Youth Entrepreneurship, 2012).
Of the newly born enterprises, only 50% survive after 5 years (EIM Business & Policy Research,
2011). However, young people’s businesses that do survive have more growth potential than
those of older entrepreneurs on average. Among businesses that survived three years, those
run by people under 30 years old had an average growth rate of 206% which is almost double
the growth rate of businesses run by those over 40 (114 %). This suggests that young
entrepreneurs are a high risk but high reward type of entrepreneurs (OECD/European Union,
Policy Brief on Youth Entrepreneurship, 2012).
About 67% of employment in the non-financial business economy is provided by SMEs. Micro
enterprises contribute about 30%, small enterprises about 20% and medium-sized enterprises
about 17%. If the age of the workforce is considered, the differences between the size classes
are more pronounced. On average, micro enterprises tend to employ the highest percentage of
older employees (aged 50 years or older) and the lowest percentage of young employees (aged
younger than 25 years) of the three size classes. Small and medium-sized enterprises retain the
highest percentage of employees aged 25-50 and the lowest part of older employees. Large
enterprises, finally, employ the highest percentage of young people (EIM Business & Policy
Research, 2011).
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Average percentage of employees from different age groups per enterprise, in the EU37
business economy, by size class (2010)
Size class
Age range Total
<25 25-50 >50
Total 10 (%) 69 (%) 21 (%) 100 (%)
Large 17 (%) 65 (%) 18 (%) 100 (%)
Small and Medium 14 (%) 70 (%) 16 (%) 100 (%)
Micro 9 (%) 69 (%) 22 (%) 100 (%)
Source: Enterprise Survey 2010, SMEs and EU Labor Market, EIM/GDCC; conducted during the
final quarter of 2010
Apparently, large firms tend to hire younger employees than smaller firms do. Still by
themselves large firms will not produce jobs for millions unemployed young people displaced
by the on-going economic malaise (The final report of the Small Business Taskforce, 2013).
15. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
SMES AND YOUTH ENTREPRENEURSHIP ARE THE KEY DRIVERS OF THE GLOBAL
ECONOMY
As previous chapter shows, there are no clear common definition and classification of SMEs.
This is due, primarily, to the fact that entrepreneurs are real people, representatives of
different nations.
Every nation has a specific business practice established under the influence of its religious and
cultural characteristics, living conditions and interactions with other people, a wide range of
internal and external factors.
However, despite the peculiarities of each national business systems, the phenomenon of
entrepreneurship is the key to solve many of the problems of the global economy.
Entrepreneurship is vivid example of agonistic spirit, ability to overcome adversity, and find a
way out of difficult situations.
The most important thing now is to prevent the transformation of agonistic spirit in aggression
and nihilism.
There is a strong need to encourage the development of entrepreneurship, which is a
significant factor in the reduction of social risks and, therefore, risks of the global economy, and
it is time to emphasize that any seriously grounded policy to reinvigorate growth and job
creation should have entrepreneurship at its core, with a strong emphasis on youth.
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
RECOMENDATIONS
1. INFRASTRUCTURE
For emerging and growth ventures, digital infrastructure and electronic access to government
services and payment networks is a necessary platform for future growth, innovation, national
and international cooperation.
Creating affordable broadband is the basis of the development of SMEs and self-employment.
For instance, Estonia is one of the leading research in the case of a rapid development of the
Internet economy. By 1997, 97% of Estonian schools have the internet and the country has
become one of the leading web-enabled economies. Free Wi-Fi is now ubiquitous. As a result,
Estonia now has one of the highest GDP growth rates in Europe.
IT sector is also useful in job creation for people with disabilities in the area of software
development, remote maintenance and administration. Internet allows for distance learning
and, thereby, for future distance work.
Infrastructure is paramount
17. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
16
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
1.1 QUESTIONNAIRE RESULTS ANALYSIS – INFRASTRUCTURE
The respondents were asked lack of what infrastructural elements had affected their
companies’ growth.
Limiting factors
The variety of infrastructure factors which are adversely impacting business growth could be
broken down into two areas:
1. Telecommunication infrastructure;
2. Infrastructure in its general terms, i.e. roads, transport, energy
Lack of the reliable telecommunication infrastructure has become a critical factor impeding
small and medium-sized companies growth.
The telecommunication infrastructure deficiency manifests itself in the following:
Absence of quick and reliable broad band internet supply which is a key limiting factor;
Cost of telecommunication is high;
Low internet channels capacity often results in public servers collapse on tax payment
days;
It is a standard case when internet connectivity is available only during office hours;
Availability of the electronically provided government business services and business-
related public information is restricted;
Government internet pages are not regularly refreshed;
Accounting reports and electronic payments gateways are rarely acceptable for SMEs
Another category of infrastructure factors which are adversely impacting business growth is
lack of infrastructure in its general terms, i.e. roads, logistics, transport, energy.
Main complaints in this area refer to:
Transport network is not adequately developed;
Transport, logistics and energy costs are high.
Both issues adversely affect market competitiveness of SMEs making it difficult for them to
keep prices competitive at the market.
1.2 RECOMMENDATIONS:
- Ensure access to reliable high-speed internet connections at a reasonable cost for start-
up and growth businesses, especially outside of large cities.
- Provide government business services electronically, reducing expensive staff and time
resources.
- Ensure unrestricted digital access to all business-related public information regarding
regulations and taxation.
- Ensure Internet-neutrality by overseeing companies that control online content flow.
- Support the development of global electronic payment networks.
18. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
17
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
1.3 REPRESENTATIVE EXAMPLES OF GOOD SOLUTIONS IN INFRASTRUCTURES REALM
BUSINESS3.BIZ
BUSINESS3.BIZ represents an information environment that enables to describe the objects in
such a way that they can be processed in detail. Today in the field of automatic data processing,
there are two major processes - the enterprise management system and search systems.
Their main differences are as follows:
Search systems work with virtually any input of information, but in practice, it does not handle.
Searching system in the majority of cases does not "understand" what is contained in the
document, for it is simply a set of words falling under certain statistical regularities.
Enterprise management systems, in contrast, do "understand" what is contained in the
document and how to handle it, but the document must be prepared specifically for this
business process and often not applicable to other process.
There are lot of discussions about creation of systems in which documents would be formed in
such a way that they can be further automatic processed, i.e. that all data contained in the
document would be "understood" by machine and can be processed. One example of such a
system is business3.biz.
The system has the concept of an object. A roll of object can play an organization, person,
product, and any other unit that has a set of unique characteristics, functions and relationships.
Objects can be included in one another, for example, an employee in the organization, and the
apartment of the house. Based on the values of the presence and the characteristics, an
information of the object can be processed. Despite the fact that the technical implementation
of this architecture is very complicated, this approach gives a great result.
The following problems can be solved within the system:
Collection of information. As practice shows, the most painful moment in the operation of any
electronic systems is the data entry. In addition to the usual manual input business3
implemented three following types of data collection:
- Parsing. Using a specially developed program, gives a chance to gather information from
any websites, databases, organizations and individuals, electronic documents and
convert it to the view, which is clear for system.
- Data transfer. Due to the standardization of all parameters of objects within the system,
it is possible to transfer any data from user to user or between user’s databases (with
their agreement). Functional transfer can be carried out with descriptions of any object
within any process.
- Re-use of data. On average, 80% of the data contained in a new document is already
contained in any other document. The system allows using the data, which is already
entered. This is implemented in the polls, which use information from the profiles of
companies, people, and previous surveys and nested descriptions gathering from ready-
made descriptions. The latter gives, for example, the ability to change the information
on all the apartments in the house, changing the description of the house.
19. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
18
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Searching and filtering. It is possible to search for any object groups that have the
characteristics of one type. You can find products, companies, or employees, matching the
given requirements, you can find out what types of equipment use certain components and
assess their potential market outlets.
The calculation of the services cost. By making a certain set of rules, it is possible to carry out
calculation of the cost of insurance, shipping and other activities, which have a method for
determining the price. This method can be applied to any suitable object. For example, with the
help of this system, it is possible to purchase tables, chairs and computers for the office, and if
they have the parameters of weight and size, the system will calculate the shipping cost for
each carrier and offer the best solution.
Collection systems from components. By creating the layout rules, it is possible to build
systems. For example, find component parts to make a computer. The system will calculate the
overall performance of certain parameters, the adequacy of the power supply etc. In some
cases, the system will be able to configure optimal solution for the given requirements and
price.
Such assemblies can be sold in the system as an object of copyright, making it easier to
outsource the design work while expanding the range of ready-made solutions.
Preliminary estimates. Using the previous three units, makes is possible to configure and
calculate the cost of production of the goods, to obtain a list of supplier plants, transportation
companies and other contractors.
Smart surveys. While filling out forms and surveys the system is able to generate ready
documents from templates. At the moment, on the basis of this functional issue, business3 is
trying to find a solution, that allows the entrepreneur to fill out a length survey, and to obtain
information about all activities that is necessary to perform in order to comply with all
government requirements, and avoid violations and subsequent sanctions, as well as all
possible ways of government and non-government support. The system provides a preliminary
report on the likelihood of receiving support. This functionality can be used to make a
preliminary decision to grant credit, participation in associations etc. Any company registered in
the system can technically get such a preliminary decision. It gives chance to promote services
to the market, through the agreements on access to pools of customers of other organizations,
sharing pools and other methods of cooperation.
The idea of the system creators is to make an environment in which an organization can
completely abandon the routine concerning infrastructure support and focus on working on its
product or service.
20. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
19
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
2. EDUCATION FOCUSING ON THE RIGHT SKILLS FOR YOUNG PEOPLE
Human capital is the main factor of sustainable development of post-industrial economy, which
increasingly depends on continuous innovation for growth and prosperity. The issue of human
capital development is therefore relevant to all G20 countries.
The level of education is the most common indicator of the quality of a country's stock of
human capital. Knowledge plays a key role in international competitiveness. Entrepreneurial
ventures cannot grow without skilled people, and new employers and new employees must
evolve together. At the same time, innovative small businesses continually report on the
paucity of appropriately skilled people and managers to hire. The proportion of tertiary
education graduates with a bachelor’s degree at minimum shall rise significantly especially in
the emerging market countries, allowing more young people to either start a successful
business or be hired by such.
Personnel matters
21. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
20
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
2.1 QUESTIONNAIRE RESULTS ANALYSIS – EDUCATION
Educational Attainment – SMEs operating in innovative areas experience shortage of
qualified employees.
The level of education is the most common indicator to quantify a country's stock of human
capital. Knowledge plays a key role in international competitiveness and in a society with a
greater need for qualified personnel. Entrepreneurial ventures can never grow without
professionals, and the two basic types of professionals needed — new employers and new
employees — must evolve together. Personnel matters
At the same time innovative small business continually reports on the paucity of appropriately
skilled people and managers to hire. There is a strict demand for support of the modernization
of higher education. Current education priorities not always ensure young people have access
to knowledge and skills vital for the new technological and business realities of the 21st
century. Educational opportunities shall be tailored to provide the skills to match business
needs. The proportion of tertiary education graduates with a bachelor’s degree shall rise
significantly especially in the emerging market countries.
The deficit of the skilled and professional staff may be attributed to the following reasons:
Inadequate educational level;
Lack of special knowledge and skills acquired through professional training and
practical experience;
Lack of vocational and university training opportunities which are in line with labour
market needs;
Lack of specialized business and social networks, as well as technologically advanced
business centres at universities. Infrastructure community between universities and
business incubators is currently insufficient.
Small business associations, networks, organizations – Entrepreneurial networks are not
enough developed and structured
This is a worldwide true statement that post start-up growth is the far bigger challenge than
simply starting a venture. The vast majority of startups has not grown and ended up at the level
of just a few employees.
Small business “growth-after-start” is an issue, which requires strong support provided in the
form of coaching, professional advice, fast tracking to the trusted sources of financing and to
the marketplace. The promulgation of universal entrepreneurial behavior culture, cross border
services, networking and access to the sources of valid business information are indisputable
keys to successful growth of innovative startups.
The network of domestic and international accelerator centers, innovation hubs, business
associations and incubators shall significantly expand. Meanwhile there is a noticeable lack of
cohesive clusters, reputable incubators, and information networks where and with the aid of
which startups can develop into SMEs.
2.2 RECOMMENDATIONS:
22. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
21
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
- Review educational priorities to ensure young people have access to knowledge and
skills vital for the new technological and business realities of the 21st century.
- Facilitate promotion of an entrepreneurial culture through all layers of the schooling
system, with a focus on the values of ethics and business morals.
- Develop standardized enterprise development programs, which include widespread
training in basic entrepreneurship and risk management skills, and utilize the Internet to
deliver top-quality informational resources.
- Support creation of specialized business and social networks (local and international),
and technologically advanced business centers at universities, giving students access to
the skills and tools necessary to put theory into practice; incubation services and co-
work spaces; reduced costs of searching for information, partners and suppliers; and
management, recruiting, accounting and other resources for start-up initiatives.
- Promote close cooperation between businesses and schools to better link educational
pathways with labor market needs, and to effectively support and provide guidance to
students in their career choices and job search.
- Stimulate the establishment of work-based learning systems (internships,
apprenticeships, vocational trainings etc.).
- Expand, streamline and coordinate government funding programs targeted to R&D in
green growth technology.
2.3 REPRESENTATIVE EXAMPLES OF GOOD SOLUTIONS IN EDUCATION AND BUSINESS
NETWORKS REALM
Today there are just a few positive examples of the SMEs-related acknowledged educational
projects and business networks and organizations. The list of representative examples is given
below:
AEN (Aquitaine - Euskadi – Navarra University network) and TEMPUS (Trans European
Mobility Programme for University Studies);
The Accelerator Centre founded in Waterloo due to initiative of federal, provincial and
municipal governments to support SME growth;
Vast network of supporting institutions in Canada:
The Research, Innovation, Commercialization (RIC) Centre, MaRS (Medical and Related
Sciences) which have helped SMEs applying for the governmental grants and getting
personalized advice from qualified entrepreneurs;
Paris HEC incubator to support the companies created by students, graduates and
participants from various groups on campus;
New Enterprise Incentive Scheme (NEIS) which offers practical small business training,
business mentoring and financial assistance from the Australian government;
Association of SMEs and large companies to act in favour of the development of SMEs
innovation and growth (The International SME Pact).
The brief information on the mentioned centres, programmes and institutions:
23. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
22
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
AEN (Aquitaine - Euskadi – Navarra University network) and TEMPUS (Trans European
Mobility Programme for University Studies) projects
AEN and TEMPUS are the European Union’s programmes which support the modernisation of
higher education in the EU's surrounding area and establishing relations through education
with several key markets. (AEN, TEMPUS).
Aquitaine Euskadi Navarra Network (AEN) is a border area of higher education and research for
university cooperation and competitive dynamics at European and international level.
AEN network’s aim is to promote cooperation between universities network across borders as
well as internationally to promote their integration into the European Space of Higher
Education and Research.
AEN network is positioning itself as a key player in the construction of the European Higher
Education and Research with the following objectives:
Build a border area of higher education and research on regional space-Aquitaine-
Euskadi Navarra by promoting:
o mobility of faculty, students and administrative staff within the partner
universities,
o the establishment of joint training courses (course Integrated Studies, co-
supervised theses)
o the development of joint research projects and cooperation with businesses,
o exchange of good practices, sharing of know-how and harmonization of
expertise,
o mutual knowledge and regional identity (establishing cultural activities,
development of language skills areas in collaboration with local authorities and
chambers)
o foster these collaborations at European and international network among
universities with third parties
o the development of European Masters of Excellence (type Erasmus Mundus)
o mounting international projects in training, research and / or transfer of know-
how (such as Erasmus Mundus External Cooperation Window- EM ECW)
o Cooperation with third countries (e.g. TEMPUS Projects)
TEMPUS
TEMPUS is the European Union’s programme which supports the modernisation of higher
education in the EU's surrounding area. Tempus promotes institutional cooperation that
involves the European Union and Partner Countries and focuses on the reform and
modernisation of higher education systems in the Partner Countries of Eastern Europe, Central
Asia, the Western Balkans and the Mediterranean region.
Waterloo Accelerator Centre
The Accelerator Centre (AC) in Waterloo, Ontario is a world-renowned, award-winning centre
for the cultivation of technology entrepreneurship. The Centre has been made possible through
funding from Federal and Provincial Governments, Ontario Centres of Excellence, the Regional
Municipality of Waterloo and the University of Waterloo, along with industry and academic
partners. The AC was established to accelerate the creation, growth, and maturation of
24. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
23
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
sustainable new technology companies and to generate economic benefit of Waterloo Region
within Ontario and Canada's broader economy.
RIC Centre
The Research, Innovation, Commercialization (RIC) Centre is a virtual incubator that supports
creative technical innovators to get to the marketplace successfully. RIC can provide access to
programs & workshops that can help strengthen and expand business knowledge. The Centre
works with technology entrepreneurs in Aerospace, Advanced Manufacturing, Life Sciences and
Emerging Technologies, providing key connections to fast-track their journey to market success.
The Ministry of Economic Development & Innovation supports RIC Centre. As a not-for-profit
organization RIC offers a comprehensive range of supporting activities for entrepreneurs
including one-on-one coaching, practical training and networking events.
MaRS (Toronto, Canada)
Originally, MaRS was a filename: Medical and Related Sciences. Then the realm of activities
expanded, including a broader range of innovative sectors. MaRS provides resources — people,
programs, physical facilities, funding and networks — to ensure that critical innovation
happens.
L’incubateur HEC
Founded in 1881 by the Paris Chamber of Commerce and Industry, HEC Paris specializes in
education and research in management sciences. The HEC Incubator is a program of the Centre
for Entrepreneurship at HEC Paris. The HEC Incubator was born in September 2007 to address
the need to support the many companies created by students, graduates and participants from
various groups on campus.
NEIS New Enterprise Incentive scheme
The New Enterprise Incentive Scheme (NEIS) is an Australian government unity which provides
job seekers with accredited small business training, business mentoring, and income support to
help them turn a business idea into a viable business and help them to become a self-employed
business owner.
The scheme is delivered by a national network of NEIS providers under Job Services
Australia (the employment services system), in locations right around the country.
NEIS providers include local organisations, such as Business Enterprise Centres, TAFE Small
Business Centres, community organisations, and private sector businesses. A NEIS provider
gives job seekers personalised assistance to help them achieve their business goals, and will
maintain regular contact for the first year of the new business to provide help to
the NEIS participant to work through any business problems.
Job seekers participating in the scheme receive a NEIS Allowance for up to 52 weeks while they
are operating their NEIS business. The amount received is not affected by the income received
from the NEIS business and some participants may also be eligible to receive NEIS Rental
Assistance.
Association of SMEs and large companies to act in favour of the development of SMEs
innovation and growth (The International SME Pact).
25. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
24
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
The program was launched in 2005 by OSEO (French Public investment bank) and the Comité
Richelieu (a professional association uniting high-tech SMEs). The SME Pact is a tool to help
SMEs identify international contacts, to get advice on the markets, partners and locations.
26. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
25
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
3. BUSINESS AND LABOR LEGISLATION ENVIRONMENT
There is strong demand for easy-to-understand, employment-friendly labor laws, which are
currently considered to be complex, rigid, a huge drain on SME resources in terms of both
administrative resources and compliance, and high risk vis-à-vis hiring and laying-off
employees.
The importance of intellectual property right becomes increasingly important for SMEs engaged
in proprietary software & web development, business process outsourcing, and knowledge
process outsourcing. These areas are critical to global value chains operating efficiency.
Any institutional changes should be directed toward the sustainable development and ability of
SMEs to scale-up, which will lead to positive cumulative effects on the global economy as a
whole.
Red tape
27. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
26
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
3.1 QUESTIONNAIRE RESULTS ANALYSIS – BUSINESS AND LABOUR LEGISLATION
ENVIRONMENT
SMEs see the big difficulties as a consequence of the rules regarding labour, tax and intellectual
property protection laws.
The ability of companies to flexibly manage their workforce is an important factor in general
business competitiveness. There is a strong demand for easy-to-understand, employment-
friendly labour law which at present is considered to be complex and rigid. Employment
legislation is a big administrative headache for the small business. It is very often excessively
complicated and unstable.
The entrepreneurs continually encounter with time taking bureaucratic obstacles. This is
especially the case for non-European market.
The importance of intellectual property right becomes increasingly important for SMEs engaged
in proprietary software & web development, business process outsourcing, and knowledge
process outsourcing.
The existing intellectual property protection policies and laws are judged by the entrepreneurs
as unclear or outdated. International property and patenting polices in the different countries
are not unified and contradictory. It specifically creates problems with certification of the new
technologies and/or of the equipment manufactured abroad. There is a strong need for
increased harmonization of commercial laws in different countries. Business legislation
environment shall be further improved in terms of stability, publicity, clarity and predictability.
SMEs operating on international market face financial losses because of high import taxes and
inapplicability of tax credit benefit solutions (for example R&D tax credit programme is
inapplicable to a Canadian small company performing research and development outside of
Canada).
Tax and tariffs incentive programmes addressed to tax burden decrease for SMEs operating in
the innovative areas shall be further developed.
3.2 RECOMMENDATIONS:
- Revise the tax burden on labor (including both wage and non-wage labor costs on the
part of the employer, as well as income taxes on the part of the employee) in two
priority areas:
Innovation (implementation of scientific and technical programs, improvement
of the technical means of production, and the development of new high-tech
equipment and technologies);
Social entrepreneurship (for example, social care, opening of schools, or the
launching of immigrant assimilation programs).
- Harmonize labor laws to strike the right balance between the needs of workers and
employers by introducing simplified labor regimes for start-ups in the first three years of
their existence; establish simplified rules for hiring and laying-off; and organize simple
procedures for dispute resolution.
28. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
27
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
- Promote business legislation that minimizes the stigma and punitive nature of
bankruptcy.
3.3 REPRESENTATIVE EXAMPLES OF INCENTIVE LABOUR LEGISLATION PROGRAMMES
CIR - The Research Tax Credit (France)
CIR is a corporate tax relief measure based on R&D expenses incurred by firms operating in
France. SMEs can receive an immediate research tax credit rebate for R&D expenditure
incurred in the previous year. All R&D expenses are taken into account (salaries, social security
contributions, running costs, depreciation, patents, technology watch, etc.).
The SR&ED Program (Canada)
The SR&ED Program is a federal tax incentive program, administered by the Canada Revenue
Agency (CRA), that encourages Canadian businesses of all sizes (including SMEs), and in all
sectors to conduct research and development (R&D) in Canada. It is the largest single source of
federal government support for industrial R&D. The SR&ED Program gives claimants cash
refunds and/or tax credits for their expenditures on eligible R&D work done in Canada.
Feed-in Tariffs (Germany)
An economic policy created to promote active investment in and production of renewable
energy sources. Feed-in tariffs typically make use of long-term agreements and pricing tied to
costs of production for renewable energy producers. By offering long-term contracts and
guaranteed pricing, producers are sheltered from some of the inherent risks in renewable
energy production, thus allowing for more diversity in energy technologies. The feed in tariff
approach could be illustrated by German Renewable Energy Act (EEG).
Tax credits (“TEPA Law” France)
According to “TEPA Law” money invested in the capital for SMEs shall be deducted from
the solidarity tax on wealth levied on the investor.
Personal allowance
According to French legislation the would-be entrepreneurs who decide to resign from job to
start a new company are granted with 15 months unemployment allowance.
NAFTA (The North American Free Trade Agreement)
The North American Free Trade Agreement (NAFTA) is an agreement signed by Canada, Mexico,
and the United States. NAFTA can be judged as a good representative example of the
international trade agreements supporting small and medium-sized businesses.
A key source for innovation, job creation and export growth in each of the NAFTA countries has
been smaller, often newer firms.
How does NAFTA benefit trade? First, it eliminates tariffs. This reduces inflation by decreasing
the costs of imports. Second, NAFTA creates agreements on international rights for business
investors. This reduces the cost of trade, which spurs investment and growth especially for
small businesses. Third, NAFTA provides the ability for firms in member countries to bid on
government contracts. Fourth, NAFTA also protects intellectual properties.
29. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
28
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
The SME Pact
The "International SME Pact" (Le Pacte PME) was launched in 2005 by OSEO (French Public
investment bank) and the Comité Richelieu (a professional association uniting high-tech SMEs)
The core idea of SME Pact is to enhance the role played by large corporations in supporting
SMEs in foreign markets. This type of support shall be exercised in the form of sharing
experiences and address book or logistical support. It embodies the mobilization of large
French companies to serve SMEs to give them certain abilities that their size does not allow
them to possess.
30. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
29
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
4. ACCESS TO FINANCE
Making credit markets work for start-ups, as well as for SMEs, is a policy prescription of long
standing, and yet one that is often unrealized. Supporting the sustainability of enterprises
converges with the objective of generating quality jobs.
Access to finance is an important prerequisite to enterprise growth, be they newcomers to the
market, or those seeking financing for a new type of product or service.
Finance and ideas (levels of paternalism)
Current problems:
1. Poor or lack of collateral. It is necessary to study the legal basis for foreclosure.
2. In small and medium-sized enterprises, as a rule, there are poor financial records,
making it difficult to monitor the solvency of borrowers, which is obliged to banks.
3. Lack of understanding of the banking products by SMEs.
4. Opacity of the borrowers.
5. Insufficient development of the branch network in the regions
4.1 QUESTIONNAIRE RESULTS ANALYSIS – ACCESS TO FINANCE
31. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
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“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Financing is necessary to help SMEs set up and expand their operations, develop new products,
and invest in new staff or production facilities.
The main conclusion, which could be drawn from the respondents’ answers is: SMEs are at a
particularly severe disadvantage when trying to obtain financing relative to larger and more
established firms. Access to finance is a key barrier to the growth of SMEs.
The three key institutional features preventing access of small firms to formal sources of
external finance (such as banks, capital markets or other suppliers of credit) are:
High interest rates environment:
SMEs tend to be newcomers to the market, or seeking financing for a new type of
product or service. Hence they represent a higher risk to banks and cannot be assessed
in the same manner as large firms.
Banks respond to greater risks by charging higher interest rates. This makes it practically
impossible for many SMEs to borrow money at all because the price of credit is too high.
Collateral approach:
There is an incomplete range of financial products and services suitable for a small
business company with no solid track records enforced by sufficient collateral.
Limited Angels community
The angel investor market is limited.
Detailed list of most common barriers between small firms and sources of external finance
include the following:
SMEs tend to be newcomers to the market, or seeking financing for a new type of
product or service. Hence, they represent a higher risk to banks and cannot be assessed
in the same manner as large firms.
Banks respond to greater risks by charging higher interest rates. This makes it more
impossible for many SMEs to borrow money at all because the price of credit is too high.
Banks may avoid providing financing to start-ups and very young firms that typically lack
sufficient collateral and/or don’t have solid track records. Many entrepreneurs rely on
the “seed” money, which comes from friends, professional contacts and family.
Banks may avoid providing financing to SMEs, whose activities offer the possibilities of
high returns but at a substantial risk of loss. Sometime the companies producing value
added products face more obstacles in obtaining funding than companies working in
primary sectors.
There is an incomplete range of financial products and services tuned to SMEs
specificity. The angel investor market is limited.
Gaps in the legal framework and regulatory rigidities make the financing procedure
quite bureaucratic and time consuming.
Lack of information on both the bank’s and the SME’s side. It is not always possible to
obtain qualified consultancy on financing arrangement.
32. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
31
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Meanwhile some successful stories were also reported by the respondents. In the countries
with competitive financial market, lending to SMEs has been encouraged by Credit Guarantee
Schemes.
Irrespectively of the Scheme arrangement particulars, it is intended to address two distinct
barriers to lending: inadequacy of collateral and inadequacy of understanding of the novelty of
a business model, market, sector or technology. It is exclusively targeted towards companies
who are unable to access credit because of these two particular market failures.
The Credit Guarantee Scheme uses government guarantees on unsecured borrowing by banks,
enabling them to borrow at a cheaper rate.
Credit Guarantee Schemes are a common feature of financial systems across the world. The
Scheme has been an instrument to improve access to finance by SMEs and young firms during
the recent global financial crisis. Over 2008-2010, in many countries, new guarantee
programmes were set up and existing loan guarantee programmes started up, as part of
government anti-crisis packages. In several non-OECD countries, the credit guarantee schemes
have also developed rapidly as a mechanism to expand credit markets and improve financial
inclusion.
4.2 RECOMMENDATIONS:
- Facilitate the development of a comprehensive range of financial products and services
suitable for start-ups/small businesses, including development of the methodology for
financial institutions that finance SMEs, striking a balance between "risk" and "trust".
- Ensure that funding on favorable terms is available from a variety of private funds, local
banks, as well as state and local government sources for higher risk investment in
capital expenditures for new product development and marketing.
- Reduce bank requirements concerning amount of mandatory reserve fund allocations
when lending to SMEs, and enable the use of mandatory reserve funds for support of
their current liquidity.
- Require international and regional development banks to set up programs tailored to
support cross-border cooperation between growth ventures and corporations in the
development of new products and technologies.
- Develop regulations to accommodate development of new innovative forms of
financing, including online cross-border platforms and networks of investors and
entrepreneurs.
4.3 THE LIST OF VARIOUS ORGANIZATIONS, CENTERS AND FOUNDATIONS, WHICH
ADDRESS DIFFERENT TYPES OF SUPPORT FOR SMES AND YOUTH ENTREPRENEURSHIP
Mediateur du Credit aux entreprises (Mediator of credit to businesses)
OSEO (French Public investment bank)
Early Stage Venture Capital Limited Partnerships (Australia)
NACO (National Angel Capital Organization, Canada) – Building innovation economy through
angel investing
33. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
32
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
Fondation du Maire
Quebec Entrepreneurship Contest
SAJE Montreal Centre (Youth Program Sponsors)
Canadian Youth Business Foundation (CYBF)
BDC Advice Centre (Canada)
National Research Council of Canada - Industrial Research Assistance Program Services
Atlantic Canada Opportunity Agency (ACOA)
Ontario Centres of Excellence
Brief information on the listed organisations is given below:
Mediateur du Credit aux entreprises (Mediator of credit to businesses)
Mediation is available to businesses facing funding difficulties or credit insurance. Mediation of
credit was created to leave no single company meet its financial difficulties.
OSEO (Public investment bank)
OSEO was born in 2005, by bringing together ANVAR (French innovation agency) and BDPME
(SME development bank). Its mission is to provide assistance and financial support to French
SMEs and VSEs (Very Small Enterprises) in the most decisive phases of their life cycle: start up,
innovation, development, business transfer / buy out. By sharing the risk, it facilitates the
access of SMEs to financing by banking partners and equity capital investors.
OSEO covers three areas of activity:
Innovation support and funding: for technology transfer and innovative technology-
based projects with real marketing prospects.
Guarantee funding granted by banks and equity capital investors.
Funding investments and operating cycle alongside the banks.
OSEO head structure is a holding with public status. It reports to both the Ministry for
Economy, Finance and Industry, and Ministry for Higher Education and Research.
Investment Programme for the Future: EUR 300 million for strengthening the competitiveness
of SMEs and industrial strategic sectors.
Early Stage Venture Capital Limited Partnerships (Australia)
An early stage venture capital limited partnership (ESVCLP) raises capital and invests in high-risk
start up enterprises.
34. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
33
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
NACO (National Angel Capital Organization, Canada) – Building innovation economy through
angel investing
The National Angel Capital Organization (NACO) is Canada’s industry association representing
Angel capital in Canada, an asset class that invests an estimated $1-billion annually in Canada’s
growth-oriented companies.
Fondation du Maire
Since its creation in 1996, the Foundation has invested over $5.6 million in grants in 780 new
businesses that created over 2,328 jobs.
Furthermore, thanks to a network of experienced business people, the Foundation provides
training, coaching and mentoring to its laureates free of charge, in order to accompany them,
and even guide them, through the start-up of their business.
Quebec Entrepreneurship Contest
The organization’s mission is to develop Québec entrepreneurial culture through the start-up
and recognition of new businesses and entrepreneurial projects in the schools.
The Québec Entrepreneurship Contest focuses on young people in schools and on new
entrepreneurs who are often at the business planning stage.
SAJE Montreal Centre (Youth Program Sponsors)
Montreal Centre is a management consulting firm whose mission is to stimulate, promote and
support the startup and growth of small and medium enterprises. The Centre provides
technical assistance in the preparation of the business plan and financial assistance in the form
of non-repayable grant.
Canadian Youth Business Foundation (CYBF)
The Canadian Youth Business Foundation (CYBF) helps to bring a business idea to life. From pre-
launch to growth and expansion, CYBF supports entrepreneurs throughout the life-cycle of their
businesses by providing coaching, financing, mentoring and business resources.
BDC Advice Centre (Canada)
Mission of the Centre is to help create and develop Canadian businesses through financing,
venture capital and consulting services, with a focus on small and medium-sized enterprises
(SMEs).
National Research Council of Canada – Industrial Research Assistance Program Services
Industrial technology advisors (ITAs) assist clients through every aspect of the innovation
process, from concept to commercialization, providing technical and business advice, referrals
and other innovation services as needed.
Through its industrial technology advisors, IRAP offers financial assistance to eligible firms
under Youth Employment Program. This Program provides financial assistance to innovative
small and medium-sized enterprises in Canada to hire post-secondary science, engineering,
technology, business and liberal arts graduates. Graduates work on innovative projects within
the small and medium-sized enterprise environment and may participate in research,
35. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
34
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
development and commercialization of technologies. In addition to meeting the needs of
innovative small and medium-sized enterprises, this program facilitates the transition of highly
skilled young people to a rapidly changing labour market.
Atlantic Canada Opportunity Agency (ACOA)
ACOA provides guidance in preparation of business and marketing plans. ACOA also helps with
a list of organizations and programs that may help finance a business idea.
Ontario Centers of Excellence (OCE)
In addition to support for technologies and ideas with demonstrated commercial potential, OCE
also supports and invests in early-stage projects, where the probability of commercial success
and potential total return on innovation are both substantial.
36. Report for the development of the draft of the final communique of the G20 Young Entrepreneurs’
Alliance Summit - 2013
35
“Center for Entrepreneurship” LLC
125047, Moscow
1st
Tverskaya-Yamskaya st. 23, b.1
www.cfe.ru
Foundation “Institute for Applied Research in Facility
Management”
191023, St. Petersburg, Sadovaya st. 21
institute.fm@gmail.com
CONCLUSION REMARKS
This report begins with an epigraph, which states: "We are the State!".
Every person represents a certain country and culture. Every country has its own direct-action
laws, which do not have a verbal interpretation. Often, such laws look like products of a
sophisticated cabinet-thought rather than political wisdom. They are easy and enjoyable to
learn, but difficult to execute, and they are designed for the abstraction, not the specifics.
Perfect society is required for their implementation - society, which does not need any laws;
following the Decalogue of Moses or Percepts of Gospel would be enough.
But, entrepreneurs are real people, which do not want the abstract patterns of freedom and
equality, they insist on open space for business initiatives and safety of persons and property.
Today, one of the most important characteristics of economic relations is the degree of
paternalism in the relationship between states and entrepreneurs. Governments are obliged to
take responsibility for the economic situation, or rather to make a choice between different
goals and methods of economic policy in terms of entrepreneurial development, especially the
youth.