business growth sibenik-toscana, 24.06.2005.
Small enterprises and local economic
development policies in Croatia
Slavica SingerCEPOR
business growth sibenik-toscana, 24.06.2005.
Problems in Croatia: low competitiveness
unemployment
low entrepreneurial activity
shortage of companies with growth potential
low productivity
centralized public administration
regional development imbalance
business growth sibenik-toscana, 24.06.2005.
Low competitiveness (1)Growth competitiveness Index:
Croatia 58/80 rankItaly 39/80
Economic growth, long term: technology public institutions macroeconomic environment
business growth sibenik-toscana, 24.06.2005.
Low productivity (2)
Microeconomic competitiveness Indeks: Croatia 52/80 rankItaly 24/80
Sustainable productivity level:
Business operations and enterprise strategy National business environment qualitys
business growth sibenik-toscana, 24.06.2005.
Low entrepreneurial activity
(TEA index)
Insufficient number of businesses with a growth potential, inovative businesses
(FEA indeks)
Profitability of SME’s is under average
Our reality
business growth sibenik-toscana, 24.06.2005.
Low entrepreneurial activity 2002-2003 average, 41 country
New businesses (TEA)World 9.9 vs. Croatia 3.10 (41.)
Italy 4.60 (23.)
Growth businesses (FEA)World 2.0 vs. Croatia 1.12 (36.)
Italy 2.05 (24.)
business growth sibenik-toscana, 24.06.2005.
Growth businesses
% of employed in growth businesses
World 12.3 vs. Croatia 4.50 (39.) Italy 13.21 (18) Slovenia 17.1 (7.)
business growth sibenik-toscana, 24.06.2005.
•new products? For nobody, 81 %
•competitiveness level? high, even 48 %
•export? only 17 %, more than 50 % of total income prihoda
•more than 20 employees after 5 years? only 5 %
•new technology? no, even 94 %
Innovative businesses?
business growth sibenik-toscana, 24.06.2005.
Men are 2.6 times more entrepreneurs than women
Highest entrepreneurial activity is between years 25 – 34
Knowledge and skills are important:Have knowledge vs Do not have knowledgeTEA 11.96 TEA 0.21
Entrepreneur’s profile
business growth sibenik-toscana, 24.06.2005.
not enough knowledge and skills for entrepreneurship
uncoordinated government policies
administrative barriers
financial market is not developed
Causes
business growth sibenik-toscana, 24.06.2005.
Obstacles in entrepreneurship development
Education
Government policies/programmes
Culture and social norms
business growth sibenik-toscana, 24.06.2005.
Self-employment – desirable career?o 58 % yes
Entrepreneurs have high social status?o 48 % NO, 28 % yes, 24 % don’t know
Successful entrepreneur’s stories are presented through media?o 48 % NO, 40 % yes
Values
business growth sibenik-toscana, 24.06.2005.
Entrepreneur is being born, one can not become entrepreneur? No, education has very important role.
People with RELEVANT knowledge and skills are more likely to use entrepreneurial opportunity – more advantage for national economy
11.96 TEA (with knowledge and skills) vs. 0.21 TEA (without knowledge and skills)
GEM 2003
business growth sibenik-toscana, 24.06.2005.
SME - dominant structure of economy
SME - only source of new employment
employment in big enterprises is halved
employment in small enterprises has doubled
Small enterprises, big challenge
business growth sibenik-toscana, 24.06.2005.
SME’s and regional development
N ov os tvorena vrijednostkod m alih i s redn jih poduzetn ikapo župan ijam a (u m il. kn)
GRAD ZAGREB
PRIMORSKO-GORANSKA
ISTARSKA
ZAGREBAČKA
OSIJEČKO-BARANJSKA
VARAŽDINSKA
SPLITSKO-DALMATINSKA
MEĐIMURSKA
ZADARSKA
KARLOVAČKA
KRAPINSKO-ZAGORSKA
BJELOVARSKO-BILOGORSKA
DUBROVAČKO-NERETVANSKA
KOPRIVNIČKO-KRIŽEVAČKA
SISAČKO-MOSLAVAČKA
ŠIBENSKO-KNINSKA
VUKOVARSKO-SRIJEMSKA
BRODSKO-POSAVSKA
POŽEŠKO-SLAVONSKA
VIROVITIČKO-PODRAVSKA
LIČKO-SENJSKA
14.509
2.902
2.601
2.090
1.363
1.358
1.047
890
760
733
662
616
582
538
494
437
429
357
270
234
69
business growth sibenik-toscana, 24.06.2005.
Regional imbalancesTEA 2002
2003
Zagreb 4.384.30
Istria, Primorje, Gorski Kotar 4.47 3.05
Dalmatia 3.452.43
Northern Croatia 2.831.99
Lika and Banovina 2.181.78
Slavonija and Baranya 2.11 1.00
business growth sibenik-toscana, 24.06.2005.
Šibenik-Knin County GDP per capita (2003.)
2030 USD, Croatia 6385 USD, City of Zagreb 18.843 USD
ICE (intellectual capital effectiveness) 1.58, Croatia 2.28, Ličko-senjska county 2.72
business growth sibenik-toscana, 24.06.2005.
Šibenik-Knin County - ICE Rogoznica 3.07 Tisno 2.32 Drniš 2.20 ...
Šibenik 1.43 Knin 1.36 Primošten 0.88
Murter – champion, 100 % increased value
business growth sibenik-toscana, 24.06.2005.
How to achieve changes? 55 policy recommendations for raising Croatian
competitiveness, National Competitiveness Council, 2004. – accepted by Government
8 of them are directly focused on streghtening SME’s,
but tightly connected with education for growth and developmentrule of law, compatible with the EUcost and price competitivenessinnovation and technology developmentregional development and clustersleadership mindset
business growth sibenik-toscana, 24.06.2005.
8 recommendations Develop an open entrepreneurial culture (#34) Formulate consistent government policies and
instruments to encourage entrepreneurial activity (#35)
Eliminate administrative barriers (#36) Stimulate the development of the capital market
(#37) Set up an institutional infrastructure to provide
professional services to SME’s (#38) Establish productivity benchmark (#39) Encourage the “export mentality” among SME’s
(#40) Diminish regional development inequalities –
clusters (#41)
business growth sibenik-toscana, 24.06.2005.
Develop an open entrepreneurial culture Recommendations
Formal education – TASK FORCE? Student enterprise Student enterprise trade fairs – Zagreb fair Best students business plan
Government plans: Students cooperatives Education ???? Student business plans, student enterprise trade fairs ???
business growth sibenik-toscana, 24.06.2005.
Formulate consistent government policies Recommendations:
Task force to coordinate policies, instruments and programs that encourage entrepreneurial activities in educations, tax, export and financial policy
Government plans: ?
business growth sibenik-toscana, 24.06.2005.
Eliminate administrative barriers Recommendations
Time to register 3 days (20 days 2004., 16 days 2005, 12 days 2006., 8 days 2007., 3 days 2008.)
Number of necessary forms and documents: 5 Number of licences and certificates: 1
Government plans : ?
business growth sibenik-toscana, 24.06.2005.
Stimulate the development of the capital market Recommendations
Regulatory framework for business angels and social investors
Stimulate SME’s for usage of equity funds, ESOP, IPO...)
Government plans Subsidized financing
Young Women Defenders Turism
New ways of financing???
business growth sibenik-toscana, 24.06.2005.
Set up an institutional infrastructure to provide professional services to SME’sRecommendations
An impact analysis of all government and international programs to support the development of institutional infrastructure for the SME’s Elaborate strategy for developing professional services markets
for SME’s Elaborate a map of infrastructure institutions To identify market segments Certification for consulting services
Government plans: Financing development odcenter’s for entrepreneurship,
incubators, business areas Certification for consulting services (HAMAG) Analyses, strategies???
business growth sibenik-toscana, 24.06.2005.
Productivity benchmark Recommendations
Comparative analysis of the material costs, labour costs and profit margins in Croatia and EU
FINA(financial agency) indicators publicly available Stimulating quality certification
Government plans : Subsidizing quality certificates Analysis??? FINA(financial agency) ???
business growth sibenik-toscana, 24.06.2005.
Encourage the “export mentality” among SME’s Recommendations:
Research in foreign market niches Loans for export programs Participation in international trade fairs
Government plans: Loans for export programs Participation in international trade fairs
business growth sibenik-toscana, 24.06.2005.
Diminish regional development inequalities – clusterss Recommendations
Clusters
Government plans: Clusters
business growth sibenik-toscana, 24.06.2005.
Contact SME Policy Center - CEPOR
Trg J.F. Kennedy 7/IHR-10000 Zagreb, Croatiatelephone: +385 1 2305 363fax: +385 1 2345 577www.cepor.hrE-mail: [email protected]