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Public policy towards small firms: Spreading the jam too thinly?*

Public policy towards small firms: Spreading the jam too thinly?* Abstract This article considers the growing economic role and continued economic importance attached to the UK's small and medium sized enterprises (SMEs), a sector of the economy which is overlooked by commentators and economists. The rationale underlying the UK's ‘SME policy’ is outlined and placed in a European context. In particular, the authors carefully set out the arguments and evidence apparently supporting the view that small firms, in particular those currently expanding, are a key ‘economic driver’, creating jobs even during recessionary periods. As such, the SME sector deserves the emphasis currently placed upon it by the recent Conservative government as a focus of policy intervention. However, with reinterpretation of the evidence such statements are carefully dismantled and shown to be somewhat of a cliche. The authors make clear their view that policy attention has focused on the wrong areas of the economy. Emphasis on developing a small firm sector has done little to improve the UK's long‐term economic performance. Indeed, policy has exacerbated regional disparities in the economy, choked off productivity improvements and, above all, done little to bring down levels of unemployment and provide ‘quality’ jobs. By placing the UK experience in a European context, the authors claim that public money has been wasted on trying to encourage individuals to start up their own business on the grounds that (a) many would have turned to self‐employment (as a result of economic conditions and the large‐scale restructuring which has taken place over the last twenty years) with or without government intervention, and (b) policy intervention has been ineffective in assisting small firms to develop. The article concludes that if a small firm sector is to remain a component of government economic strategy, policy needs to address the issue of targeting those few firms likely to generate significant levels of economic activity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of European Public Policy Taylor & Francis

Public policy towards small firms: Spreading the jam too thinly?*

Public policy towards small firms: Spreading the jam too thinly?*

Journal of European Public Policy , Volume 3 (2): 19 – Jun 1, 1996

Abstract

Abstract This article considers the growing economic role and continued economic importance attached to the UK's small and medium sized enterprises (SMEs), a sector of the economy which is overlooked by commentators and economists. The rationale underlying the UK's ‘SME policy’ is outlined and placed in a European context. In particular, the authors carefully set out the arguments and evidence apparently supporting the view that small firms, in particular those currently expanding, are a key ‘economic driver’, creating jobs even during recessionary periods. As such, the SME sector deserves the emphasis currently placed upon it by the recent Conservative government as a focus of policy intervention. However, with reinterpretation of the evidence such statements are carefully dismantled and shown to be somewhat of a cliche. The authors make clear their view that policy attention has focused on the wrong areas of the economy. Emphasis on developing a small firm sector has done little to improve the UK's long‐term economic performance. Indeed, policy has exacerbated regional disparities in the economy, choked off productivity improvements and, above all, done little to bring down levels of unemployment and provide ‘quality’ jobs. By placing the UK experience in a European context, the authors claim that public money has been wasted on trying to encourage individuals to start up their own business on the grounds that (a) many would have turned to self‐employment (as a result of economic conditions and the large‐scale restructuring which has taken place over the last twenty years) with or without government intervention, and (b) policy intervention has been ineffective in assisting small firms to develop. The article concludes that if a small firm sector is to remain a component of government economic strategy, policy needs to address the issue of targeting those few firms likely to generate significant levels of economic activity.

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References (5)

Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
1466-4429
eISSN
1350-1763
DOI
10.1080/13501769608407031
Publisher site
See Article on Publisher Site

Abstract

Abstract This article considers the growing economic role and continued economic importance attached to the UK's small and medium sized enterprises (SMEs), a sector of the economy which is overlooked by commentators and economists. The rationale underlying the UK's ‘SME policy’ is outlined and placed in a European context. In particular, the authors carefully set out the arguments and evidence apparently supporting the view that small firms, in particular those currently expanding, are a key ‘economic driver’, creating jobs even during recessionary periods. As such, the SME sector deserves the emphasis currently placed upon it by the recent Conservative government as a focus of policy intervention. However, with reinterpretation of the evidence such statements are carefully dismantled and shown to be somewhat of a cliche. The authors make clear their view that policy attention has focused on the wrong areas of the economy. Emphasis on developing a small firm sector has done little to improve the UK's long‐term economic performance. Indeed, policy has exacerbated regional disparities in the economy, choked off productivity improvements and, above all, done little to bring down levels of unemployment and provide ‘quality’ jobs. By placing the UK experience in a European context, the authors claim that public money has been wasted on trying to encourage individuals to start up their own business on the grounds that (a) many would have turned to self‐employment (as a result of economic conditions and the large‐scale restructuring which has taken place over the last twenty years) with or without government intervention, and (b) policy intervention has been ineffective in assisting small firms to develop. The article concludes that if a small firm sector is to remain a component of government economic strategy, policy needs to address the issue of targeting those few firms likely to generate significant levels of economic activity.

Journal

Journal of European Public PolicyTaylor & Francis

Published: Jun 1, 1996

Keywords: Employment; Europe; policy; small firms; trends

There are no references for this article.