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Investments in youth entrepreneurship

– by Carol Tissot

In 2014, over 73 million young people were unemployed globally. In Europe, data from February 2016 shows that, from the total youth population, the continent’s unemployment average is 20%. On one hand, Greece has almost 50%, being the highest, followed by Spain, Croatia, Italy, Cyprus and Portugal; on the other, Germany has 7%, the lowest, being followed by the Czech Republic, Denmark, Malta, Netherlands, and the United Kingdom . Add to these data the fact that young people are three times more likely to be unemployed than adults – due to lack of experience, stability, personal preferences and other reasons -, the changing demographic profile of countries, the transformations in the labor market and the scenario gets even scarier. According to the International Labor Organization (ILO) and other United Nations agencies, alternative employment options must be encouraged and learned in order to avoid a higher percentage of the population falling into vulnerable situations.

Thus, both entrepreneurship and youth entrepreneurship have become key focus of research and investment during the past decades all over the world. In Europe, the necessity of developing policies on this field became even higher after 2008, when many countries joined those suffering hard impacts of the Global Economic Crisis. The traditional assets of entrepreneurship regained strength, and its contribution to sustainable economic growth and job creation seem more important than ever.

By creating new business and driving innovation, creativity and other important competencies inside existing organizations, entrepreneurs are considered key elements inside any type of society; they are the ones able to speed up needed structural changes, introduce competition, increase productivity, build, and inclusive environment and reduce poverty. Even though this is not an exclusive role of entrepreneurs, it is widely recognized their essential contribution to these factors. According to different studies, the main explanation may lay on the entrepreneurial profile these people own, a certain ‘entrepreneurial set of behaviors’.

Due to this growing importance, many studies  have been conducted in order to understand different aspects of the field: what defines entrepreneurship, who are those becoming entrepreneurs, what are their motivations, where are they located and so on. However, more important than that, is to understand how one (a government, for instance) can foster entrepreneurial activity, in order not to grow the absolute number of entrepreneurs but also to guarantee the entrepreneurial pipeline, to better the societal perception and thus make it more attractive and also guarantee a more sustainable ecosystem.

Thus, in order to ensure the continuity and the growth of these practices, a significant investment ought to be done in youth entrepreneurship development. Yet, this investment may also contribute on tackling what ILO considers the biggest European concern nowadays: youth unemployment. Therefore, although it is known that entrepreneurship – and consequently entrepreneurial activity and what fosters its growth – is very context-based, there are some approaches to enhance youth entrepreneurship that could be accepted as universal, even if at different intensities and with different characteristics.
The first (and perhaps the most obvious) is educational, that can be further extended to training. Thus, scholars, policy makers and the population in general advocate in favor of educating children on entrepreneurship, in order to develop certain strategic behaviors and competencies from an early age . Most of those defending this approach argue that the entrepreneurial approach should be integrated on teaching, from primary school. It raises, however, some questionings: is educating children the only way? Where, when and how does it influence? The risk of this measure alone may be it’s too long term result. Thus, focused training on specific needs, shorter courses aiming to develop entrepreneurial competencies in young adults are some examples of other educational practices that could be combined.

It can not, however, stop there. According to the European Commission (EC), it is essential that counties dedicate time and financial resources on building and recreating a supportive ecosystem that fosters entrepreneurship within its national borders. In this regard, providing an organizational infrastructure composed by incubators, accelerators, investors and other entities is crucial for the sustainability of the initiatives.

These formal institutions are indispensable, such as the informal ones. The latter contribute in a different way, and are fundamental in order to create awareness about entrepreneurship in a country. For people – and especially young – to aim the entrepreneurial career, it is important to talk about it, to portrait it as a (good) option, to showcase both successful and failed (and thus stressing the importance of trying) stories in the online and offline medias and so on. It is known that the more one talks about a certain possibility, more interest is created around it. And that is what entrepreneurship also needs in most countries – visibility.

Beyond all, considering the cultural scenario of the country and understanding the type of entrepreneurial culture that wants to be stimulated is primordial. Having this clarity, developing an entrepreneurial ecosystem and thus a higher number of successful businesses and entrepreneurs may be a mere consequence of the combination of short and long-term measures, that will vary according to the economic situation, the level of development, the political objectives and so on. Thus, encouraging youth entrepreneurship requires attention, focus, and patience. The potential is there.