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Promoting Startup Creation to Fight Youth Unemployment in Southern Europe: An Efficient Public Policy?

Policy Analysis
Political Economy
Public Policy
Business
Quantitative
Southern Europe
Alessandro Gerosa
Università degli Studi di Milano
Alessandro Gerosa
Università degli Studi di Milano

Abstract

In recent years, the rise of Europe as Startup ecosystem has been recognized by many researches: the amount of Venture Capital invested in Europe has reached a level comparable to the American one (Revest & Sapio, 2012), Startup local ecosystems of London and Berlin are among the 10th globally most developed and more in general european local ecosystems are the ones growing by the highest rates (Hermann, Gauthier, Holtschke, Bermann, & Marmer, 2015). Meanwhile public policies on economic development and on business have been observed to shift gradually from the regulation of existing enterprises to the promotion of the Startup of new enterprises, in what has been called «The entrepreneurship policy», also in the European scenario (Gilbert, Audretsch, & McDougall, 2004). When in 2008 youth unemployment rates grew rapidly due to the global financial crisis, policies on entrepreneurship in European Union started to focus, both at a communitarian and at a member state level, on the promotion of the Startup of new businesses for young unemployed and NEETs (Eurofound, 2016), due to the necessity by politics to rapidly implement policies to recover the loss of credibility caused by the financial crisis (Funke, Schularick, & Trebesch, 2015). From then, the promotion of an entrepreneurial mind-set and creativity among youth and the support to the creation of innovative startups have been underlined as one of the key field of action to be pursued (European Commission, 2009). Italy can be considered a really interesting case study on this topic: being contemporarily the penultimate EU28 country for youth employment and the first EU28 country for youth self-employment (Eurofound, 2016), having activated specific policies for Startup from 2012 (Presidente della Repubblica, 2012)⁠, it theorically possess good structural conditions to verify the success of Startups policies. Also, the level of youth employment and self-employment is also very similar to the one of the others south-europe members of EU (Ibidem). The aim of our paper is therefore to open a discussion on the efficiency of such public policies, through an analysis of the capacity of startups to produce economic value and occupation in the Italian context. Taking into account a sample of 800 italian Startups arrived at the end of their cycle of developing (4 years), after which they become normal enterprises, through a longitudinal quantitative analysis of their economic performance, compared to the one of a comparative sample of non-Startup SMEs with similar dimensions and from the same production categories, we dispute the efficiency of startups to guarantee good occupational growth, economic solidity and competitiveness in the markets and the capacity of the occupational growth through Startups to create economic development, and so the adequacy of the existing policies of startup promotion and their preferability in the Italian context to more traditional forms of support to SMEs.