Why and How Do Policy-Makers and Practitioners Intervene to Encourage New Formation and Development

Topic: why and how do policy-makers and practitioners intervene to encourage new formation and development?

Small Business, Big Contribution

“Small business plays a big role in our economy,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. Small business is a big contributor to the nation’s economy, generating 50 percent of the private, nonfarm gross domestic product (GDP), according to a study released today by the Office of Advocacy of the U.S. Small Business Administration (Kobe,2007). How about UK? According to a survey, the UK economy is 99% SMEs ( BERR,2007). So out of a total of 4.8 million UK businesses, less than 1% were large corporations. Apart from one-man-bands who represent a huge 73% of all UK businesses yet only account for 7.4% of Gross Domestic Product (GDP). UK SMEs, employing one person or more, employ 14.23 million people, out of a working population of approximately 30 million. In terms of UK turnover and Gross Domestic Product (GDP) UK SMEs account for 1.48 trillion sterling.

There is empirical evidence shows that both in UK and internationally, the number of small businesses keep increasing for more than 20 years and the influence of small firm has also grown considerable(enterprise and small business, page 1). In the same way that small and new formation businesses have been an essential component in the world economy. Policy-makers and practitioners are concerned with increasing the stock of new and established SMEs. Not only for the economic benefit, for example, SMEs can encourage wealth creation, job generation and competition, but also for the social and wider benefits, such like, promote choice and opportunity for women, young people, ethnic minorities,etc.

Small business play variety role in the economic development. SMEs can be regarded as the seedbed of the economy from which large successful corporations grow. “Each day in England and Wales… over a thousand businesses start-up (and close) on average…”...