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Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference
 

Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference

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Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference

Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference
Track 1: Fostering Successful Entrepreneurship in Europe

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    Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference Dirk Pilat, Deputy Director Science, Technology and Industry at OECD, iMinds The Conference Presentation Transcript

    • iMinds the Conference, 5 December, Brussels Entrepreneurship in Europe - Enabling Innovation and Experimentation Dirk Pilat, Deputy Director Directorate for Science, Technology and Industry dirk.pilat@oecd.org
    • Outline – The role of young, entrepreneurial firms – Growth dynamics and the policies that matter – Conclusions and some policy recommendations
    • Start-up rates in Europe are not the problem … (Employer enterprise birth and death rates, services, 2010) As a percentage of the population of active enterprises with at least one employee % Birth Death 24 20 16 12 8 4 0 Source: OECD (2013), Entrepreneurship at a Glance. http://dx.doi.org/10.1787/888932892879 3
    • … as barriers to entrepreneurship have fallen Scale of 0 to 6 from least to most restrictive Index Administrative burdens on start-ups Regulatory and administrative opacity Barriers to competition Barriers to entrepreneurship in 1998 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Source: OECD, Product Market Regulation Database, www.oecd.org/economy/pmr, June 2013 4
    • Where are the new opportunities? In young firms … The contribution of firms to job creation, average over 15 countries, 2001-2011 Young firms (5 years old or less) Old firms (6 years old or more) Total % 6 4 2 0 -2 -4 -6 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: OECD Science, Technology and Industry Scoreboard 2013. http://dx.doi.org/10.1787/888932889383 2008-09 2009-10 2010-11 5
    • … independent of their size … Average over 15 countries, 2001-2011 % % 45 Employment Employment Job destruction Job destruction Job creation Job creation 45 40 40 35 35 30 30 25 25 20 20 15 15 10 5 10 0 5 Small young Small old Medium young Medium old Large young Large old Small young Small old Medium young Medium old Large young Large old 0 Source: OECD Science, Technology and Industry Scoreboard 2013. http://dx.doi.org/10.1787/888932889402 6
    • … and across most countries Employment, job creation and job destruction in young firms, 2001-11 Percentage shares, non-financial business sector (firms of 5 years old or less) Employment Job destruction % 80 70 60 50 40 30 20 10 0 Source: OECD Science, Technology and Industry Scoreboard 2013. http://dx.doi.org/10.1787/888932892917 Job creation
    • But growth of young firms is a challenge … Average size of firms less than 3 years old and 11 years old or more, 2001-2010 11 years old or more Less tha n 3 ye ars old Em ployees 100 80 Manufacturing Services 60 40 20 0 Source: OECD Science, Technology and Industry Scoreboard 2013. http://dx.doi.org/10.1787/888932904279
    • … and some regions have a more dynamic business sector than others … (distribution of firm employment growth, 2002-2005) Source: Bravo-Biosca (2010) based on national business register data.
    • … and stronger investment in risk capital (Venture capital investment, 2012, as a percentage of GDP) Later stage Early stage Breakdown not available % 0.40 0.035 0.35 0.30 0.030 0.025 0.020 0.25 0.20 0.015 0.010 0.005 0.15 0.000 0.10 0.05 0.00 Source: OECD, Entrepreneurship at a Glance 2013, http://dx.doi.org/10.1787/888932892993 Magnified
    • Some countries are better at channelling resources to more innovative firms than others … Change in firm inputs associated with a 10% change in patent stock; selected OECD countries (2002-2010) Percen tag e change in capital sto ck 5% 4% 3% 2% 1% 0% -1% -2% Source: Andrews, Criscuolo and Menon (2013)
    • … and have R&D support policies that are designed to support young innovative firms Implied tax subsidy on R&D expenditure Source: OECD Science, Technology and Industry Scoreboard 2013. http://dx.doi.org/10.1787/888932891150
    • Policies influence reallocation to innovative firms Change in firm capital associated with a 10% change in the patent stock Selected OECD countries; 2002-2010 Source: Andrews, Criscuolo and Menon (2013)
    • Key findings 1. Net job creation does not come from small, but from young firms. 2. Growth of young innovative firms means “up” or “out”; entrepreneurs need flexibility to experiment with business models. 3. Growth dynamics of firms differs across countries; in some countries, firms hardly scale after entry. 4. Policy matters, and has impacts on the scope for experimentation, and for the allocation of resources to the more innovative firms. 14
    • Five policy recommendations for Europe 1. Allow for experimentation: Reduce barriers to the entry (e.g. red tape), growth (e.g. size-specific regulations), and exit/failure of firms (e.g. penalising bankruptcy legislation). 2. Finalise the internal market – so firms can scale more easily. 3. Level the playing field for new and innovative firms: Some policies favour incumbents and MNEs (e.g. R&D tax credits), that also have a greater voice in policy development. 4. Strengthen the innovation system for young and innovative firms, e.g. through enhanced access to (risk) capital, network development, mentoring of entrepreneurs, skills development, etc. 5. Celebrate entrepreneurship. 15
    • Thank you Contact: dirk.pilat@oecd.org For more data: www.oecd.org/sti/scoreboard 16