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Government Incentives for Entrepreneurship

Josh Lerner

NBER Working Paper No. 26884
Issued in March 2020
NBER Program(s):Productivity, Innovation, and Entrepreneurship

In the dozen years since the Global Financial Crisis, there has been a surge of interest on the part of governments in promoting entrepreneurial activity, largely by providing financing. This essay explores these policies, focusing on financial incentives to entrepreneurs and the intermediaries who fund them. The motivation for these efforts is clear: the well-documented relationships between economic growth, innovation, entrepreneurship and venture capital. Yet despite good intentions, many of these public initiatives have ended in disappointment. I argue that these failures have not simply been a matter of bad luck. Instead, the unfortunate outcomes have reflected the fundamental structural issues that make it difficult for governments to launch sustained successful efforts to promote entrepreneurship over sustained periods. I highlight several critical challenges, and outline two principles that might render these efforts more effective.

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Document Object Identifier (DOI): 10.3386/w26884

Forthcoming: Government Incentives for Entrepreneurship, Josh Lerner. in Innovation and Public Policy, Goolsbee and Jones. 2020

 
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