Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1384: Improved Framework Conditions for a More Entrepreneurial, Innovative and Sustainable EU

Niklas Elert () and Magnus Henrekson ()
Additional contact information
Niklas Elert: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Magnus Henrekson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: In the wake of the corona crisis, the European Union must regain lost ground and create more favorable conditions for inclusive and sustainable economic growth. The best way to achieve this goal is by increasing the Union’s innovativeness. This effort requires extensive and broad-based institutional reforms aimed at strengthening the incentives for entrepreneurship. Innovative entrepreneurship requires collaborations with numerous agents that provide those skills and resources that the entrepreneur is lacking: inventors, key personnel, demanding customers, and early and later-stage financiers. Based on this ecosystem perspective, we propose reforms in the following six broad areas: (i) the rule of law and property rights, ii) taxation, iii) savings and finance, iv) labor market regulations and social security, v) entry and exit barriers in product markets, and (vi) human capital for entrepreneurship. The reforms would likely strengthen Europe’s innovation capacity at a time when it is needed more than ever.

Keywords: Entrepreneurship; European Union; Innovation; Institutions; Policy reform; Regulation; Self-employment

JEL-codes: L26; L50; M13; O38; O52; P14

24 pages, March 25, 2021

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