EUROPEAN PERSPECTIVES OF WESTERN BALKANS

1. EUROPEAN PERSPECTIVES OF WESTERN BALKANS ENTREPRENEURSHIP AND SME – case of Croatia Slavica Singer CEPOR, Zagreb, Croatia

2. Basic question and answer • Q: How to survive in a globalized world? • A: To develop an enterprising society of • Empowered individuals • Ethical businesses • Fair government • Active civil society, able to compete and cooperate. singer_european perspective of western balkans, sofia, 29Nov2004

3. Need for change... • In looking at problems • Connected, not isolated • In seeking solutions • Entrepreneurial (holistic, opportunity driven) • In policy approach • from traditional macroeconomic view to growth theory of firm • In definition of stakeholders • Individuals, firms, government, civil society singer_european perspective of western balkans, sofia, 29Nov2004

4. How to find best answers? • To know own situation • To know what is going on around you • To know what you want to achieve singer_european perspective of western balkans, sofia, 29Nov2004

5. Croatia now... 1 • unemployment, high and persistent • 16 % ILO - 1991-2003 • symetric change in structure of employment 1990-2000 • Doubled in small enterprises • Halved in large enterprises • regional development imbalances • 1 to 6, in GDP/capita, TEA index singer_european perspective of western balkans, sofia, 29Nov2004

6. Croatia now... 2 • low competitiveness • low entrepreneurial activity • low profitability of SMEs • high corruption singer_european perspective of western balkans, sofia, 29Nov2004

7. Competitiveness 1 • Growth Competitiveness Index: • Croatia • from 53.(2003) to 61.(2004) • Bulgaria • from 64. (2003) to 59.(2004) • economic growth in long run: • technology • public institutions • macroeconomic environment singer_european perspective of western balkans, sofia, 29Nov2004

8. Competitiveness 2 • Microeconomic Competitiveness Index: • Croatia • from 62. (2003) to 67. (2004) • Bulgaria • from 77. (2003) to 70. (2004) • sustainable level of productivity: • company operations and strategy • quality of the national business environment singer_european perspective of western balkans, sofia, 29Nov2004

9. indices TEA – total entrepreneurial activity (start-up) opportunity vs. necessity FEA – firm entrepreneurial activity (growth potential) more than 20 employed after 5 years, new products, new technology singer_european perspective of western balkans, sofia, 29Nov2004

10. Croatia vs World (1) 2002-2003 avg 41 countries Entrepreneurial activity (TEA) World 9.9 vs. Croatia 3.10 (41.) Slovenia 4.30 (35.) Growing businesses (FEA) World 2.0 vs. Croatia 1.12 (36.) Slovenia 2.70 (7.) singer_european perspective of western balkans, sofia, 29Nov2004

11. Croatia vs World (2) % of employment in growing businesses World 12.3 vs. Croatia 4.5 (39.) Slovenia 17.1 (7.) singer_european perspective of western balkans, sofia, 29Nov2004

12. Why the interest in growth firms? • employment creation • targeting on ‘winners' and ‘quality’ • the ‘middle business’ structure argument • better returns to investment - long term • better returns to public efforts • growth sector development concern • high tech development concern • developing export potential singer_european perspective of western balkans, sofia, 29Nov2004

13. Values • Self-employment desirable career? • 58 % yes • Entrepreneurs have high social status? • 48 % no, 28 % yes, 24 % do not know • Media present success stories? • 48 % no, 40 % yes singer_european perspective of western balkans, sofia, 29Nov2004

14. Entrepreneurs are born, not made? • No, education matters. • Those with more education are more likely to pursue opportunity entrepreneurship – more benefits for national growth 11.96 TEA (with knowledge and skills) vs. 0.21 TEA (without knowledge and skills) singer_european perspective of western balkans, sofia, 29Nov2004

15. Uneven distribution of optimism... Zagreb Slavonia Entrepreneurial intentions? 9.6 % 2.5 % Business opportunity? 20.4 10.3 Have knowledge? 41.5 16.9 Entrepreneur – good career? 60.3 43.8 singer_european perspective of western balkans, sofia, 29Nov2004

16. What is going on in EU... • Entrepreneurship in Europe, green paper, 2003 • Charter for Small Enterprises, 2000 – Croatia signed in 2003 singer_european perspective of western balkans, sofia, 29Nov2004

17. What Croatia wants to achieve? • Goals (2004-2014 time horizon): • Sustainable growth of GDP (55-60% of EU GDP) – 5+ % annual growth of GDP • Lowered unemployment – 8 % • Increased social inclusiveness National Council on Competitiveness 2004. singer_european perspective of western balkans, sofia, 29Nov2004

18. Many surveys agree on obstacles... • Education • Administrative barriers • Government policies/programs • Cultural and social norms singer_european perspective of western balkans, sofia, 29Nov2004

19. But small businesses ask for... • Taxation policy • Technological capacity • Better legislation • Better representation singer_european perspective of western balkans, sofia, 29Nov2004

20. Government is focusing on... • Developing institutional infrastructure for enhancing entrepreneurship • Clusters, centers for entrepreneurship, business incubators, business zones... • Subsidized loan programs • Training services for start-up entrepreneurs singer_european perspective of western balkans, sofia, 29Nov2004

21. But not enough on... 1 • Elimination of administrative barriers • No silent approval • Time to register property 956 days, EU15 48, Bulgaria 19 • Time to start a business 49 days,EU15 31, Bulgaria 32 • Costs to go through insolvency 26.1% of estate (recovery rate), EU15 70.2%, Bulgaria 34.2% singer_european perspective of western balkans, sofia, 29Nov2004

22. But not enough on... 2 • Education • Upgrading policy capacity in government • Suffocating in operational programs • Businesses with growth potential • Development of non-traditional financial instruments • Equity, business angels... singer_european perspective of western balkans, sofia, 29Nov2004

23. Concluding questions • Who are listening to whom? • Do stakeholders have capacity to communicate? • Do stakeholders have entrepreneurial capacity for change? singer_european perspective of western balkans, sofia, 29Nov2004

24. Recommendations • To work on developing capacity for • Listening • Communicating • Changing among all stakeholders (individuals, firms, government, civil society) in order to develop consensus on URGENT NEED FOR CHANGE • To identify common international perspective on progress in entrepreneurship and SME • Global Entrepreneurship Monitor project? singer_european perspective of western balkans, sofia, 29Nov2004

25. CEPOR - SME Policy Center • Centar za politiku razvoja malih poduzeća CEPOR • Contact details: Trg J.F. Kennedy 7/I HR-10000 Zagreb, Croatia Phone: +385 1 2305 363 Fax: +385 1 2345 577 www.cepor.hr E-mail: cepor@zg.htnet.hr singer_european perspective of western balkans, sofia, 29Nov2004

26. CEPOR founders Croatian Chamber of Commerce Croatian Chamber of Crafts Institute for International Relations, Zagreb Economic Institute, Zagreb J.J. Strossmayer University in Osijek, Faculty of Economics, Osijek Istrian Regional Agency, Pula Center for Entrepreneurship, Osijek Medjimurje Entrepreneurship Center, Čakovec Open Society Institute-Croatia Association of Croatian Institutions for Promoting Entrepreneurship singer_european perspective of western balkans, sofia, 29Nov2004

27. Contact details Slavica Singer Director CEPOR – SME Policy Center e-mail: singer@efos.hr singer_european perspective of western balkans, sofia, 29Nov2004