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

2. singer_european perspective of western balkans, sofia, 29Nov2004 Basic question and answer zQ: How to survive in a globalized world? zA: To develop an enterprising society of yEmpowered individuals yEthical businesses yFair government yActive civil society, able to compete and cooperate.

3. singer_european perspective of western balkans, sofia, 29Nov2004 Need for change... zIn looking at problems yConnected, not isolated zIn seeking solutions yEntrepreneurial (holistic, opportunity driven) zIn policy approach yfrom traditional macroeconomic view to growth theory of firm zIn definition of stakeholders yIndividuals, firms, government, civil society

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

5. singer_european perspective of western balkans, sofia, 29Nov2004 Croatia now...1 zunemployment, high and persistent y16 % ILO - 1991-2003 zsymetric change in structure of employment 1990-2000 yDoubled in small enterprises yHalved in large enterprises zregional development imbalances y1 to 6, in GDP/capita, TEA index

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

7. singer_european perspective of western balkans, sofia, 29Nov2004 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

8. singer_european perspective of western balkans, sofia, 29Nov2004 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

9. singer_european perspective of western balkans, sofia, 29Nov2004 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

10. singer_european perspective of western balkans, sofia, 29Nov2004 Croatia vs World (1) 2002-2003 avg41 countries Entrepreneurial activity (TEA) World9.9 vs. Croatia 3.10 (41.) Slovenia 4.30 (35.) Growing businesses (FEA) World2.0 vs. Croatia 1.12 (36.) Slovenia 2.70 (7.)

11. singer_european perspective of western balkans, sofia, 29Nov2004 Croatia vs World (2) % of employment in growing businesses World12.3 vs. Croatia 4.5 (39.) Slovenia 17.1 (7.)

12. singer_european perspective of western balkans, sofia, 29Nov2004 Why the interest in growth firms? zemployment creation ztargeting on ‘winners' and ‘quality’ zthe ‘middle business’ structure argument zbetter returns to investment - long term zbetter returns to public efforts zgrowth sector development concern zhigh tech development concern zdeveloping export potential

13. singer_european perspective of western balkans, sofia, 29Nov2004 Values  Self-employment desirable career? o58 % yes  Entrepreneurs have high social status? o48 % no, 28 % yes, 24 % do not know  Media present success stories? o48 % no, 40 % yes

14. singer_european perspective of western balkans, sofia, 29Nov2004 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)

15. singer_european perspective of western balkans, sofia, 29Nov2004 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

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

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

18. singer_european perspective of western balkans, sofia, 29Nov2004 Many surveys agree on obstacles... zEducation zAdministrative barriers zGovernment policies/programs zCultural and social norms

19. singer_european perspective of western balkans, sofia, 29Nov2004 But small businesses ask for... zTaxation policy zTechnological capacity zBetter legislation zBetter representation

20. singer_european perspective of western balkans, sofia, 29Nov2004 Government is focusing on... zDeveloping institutional infrastructure for enhancing entrepreneurship yClusters, centers for entrepreneurship, business incubators, business zones... zSubsidized loan programs zTraining services for start-up entrepreneurs

21. singer_european perspective of western balkans, sofia, 29Nov2004 But not enough on...1 zElimination of administrative barriers yNo silent approval yTime to register property 956 days, EU15 48, Bulgaria 19 yTime to start a business 49 days, EU15 31, Bulgaria 32 yCosts to go through insolvency 26.1% of estate (recovery rate), EU15 70.2%, Bulgaria 34.2%

22. singer_european perspective of western balkans, sofia, 29Nov2004 But not enough on...2 zEducation zUpgrading policy capacity in government ySuffocating in operational programs zBusinesses with growth potential zDevelopment of non-traditional financial instruments yEquity, business angels...

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

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

25. singer_european perspective of western balkans, sofia, 29Nov2004 CEPOR - SME Policy Center zCentar za politiku razvoja malih poduzeća CEPOR zContact 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.hrcepor@zg.htnet.hr

26. singer_european perspective of western balkans, sofia, 29Nov2004 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

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