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How Can Government Policies Stimulate Entrepreneurship?
become one of the government’s top priorities in recent years. In 2011 the Export-led Industrial Strategy was adopted with the goal of increasing the international competitiveness of sectors with export development potential and targeting exports growth and diversification. Armenia’s export profile is anticipated to shift from resource-based industries toward skill- and knowledge-based sectors. The strategy involves the highest levels of government, indicating the importance placed on it. An Industrial Board under the prime minister coordinates the work and ensures implementation of the decisions. The Ministry of Economy, working closely with the Industrial Board, implements industrial policy. The Armenian Development Agency implements the Export-led Industrial Strategy. In addition, several other agencies are involved in strategy implementation: • The Enterprise Incubator Foundation coordinates initiatives for developing the innovation support system, namely, establishing a venture capital fund, introducing innovation grants, and establishing technology parks. • Trade representative offices represent the interest of Armenian economic entities in foreign countries, establish business contacts, and support trade and economic agreements. • The Small and Medium Entrepreneurship Development National Center of Armenia supports SMEs and startups to be efficiently integrated into the export value chain within the framework of sectoral strategies. • The Pan-Armenian Bank will finance systemic initiatives and infrastructure projects under the Export-led Industrial Strategy. • The SME Investments Universal Credit Organization complements private financial institutions through specific tools for financing SMEs on favorable terms. Better coordination among these institutions is needed to avoid duplicating scarce resources. The government could play an important role in providing high-quality framework conditions by removing bottlenecks in the general business environment that impede able entrepreneurs with good ideas from starting new ventures and creating jobs. These conditions include well-functioning institutions, competitive markets for inputs and outputs, and a predictable system of taxation and bankruptcy legislation that facilitates resource reallocation while protecting creditors (Nolan 2003). The government could thus help facilitate a conducive business environment that allows failure and company exit as a necessary part of entrepreneurial learning; provide company incentives that favor entrepreneurs with good ideas; and introduce instruments that enable entrepreneurs to access capital for startups and ensure flexible labor market policies that enable firms to expand by attracting the best-skilled talents from outside the firm or the country. Over the past few years the government of Armenia has made considerable progress in addressing challenges to doing business through business environment reforms. Most recently, increasing competitiveness and diversifying exports have been its primary policy challenges. The country has made efforts to create Fostering Entrepreneurship in Armenia • http://dx.doi.org/10.1596/978-1-4648-0064-1