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Edited by David B. Audretsch, Isabel Grilo and A. Roy Thurik
Chapter 4: Policymakers Beware!
4 Policymakers beware! Simon C. Parker Introduction This chapter casts a skeptical eye over pro-entrepreneurship public policies. I explain why intervention might backﬁre or be rendered ineﬀective by the responses of entrepreneurs and ﬁnanciers. In addition, I discuss why some apparently innocuous pro-entrepreneurship policies are actually misguided. Some examples of inappropriate and ineﬀective entrepreneurship policies are given; and a case for discouraging rather than promoting entrepreneurship is made. In this short chapter, I do not oﬀer a detailed survey of pro-entrepreneurship and small business policies. This task has been performed elsewhere: see, for example, Storey (2003) and Parker (2004, Chapter 10). Nor is it my aim to discredit the viewpoint that entrepreneurship might generate positive spillovers (though it seems likely that negative externalities from entrepreneurship will exist as well). I simply want to discuss important drawbacks to public policy interventions in this area, in the interests of stimulating a more balanced debate about the merits of public policies that take a (sometimes instinctively) pro-entrepreneurship stance. The chapter has the following layout. The next section focuses on two logical fallacies involved with policies that target particular groups of entrepreneurs. The third section discusses ﬁve examples of pro-entrepreneurship policies that are either misguided or frustrated by private sector responses. The fourth section makes a case for discouraging support for start-ups, and the ﬁfth section concludes with a discussion of some of the practical dangers of government intervention in entrepreneurship. Two problems with policies that target entrepreneurial groups I...
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