Blackwell Reference Online

Extract

Virtually all developed economies utilize taxpayers’ money to provide either free or subsidized assistance to small business, the self-employed or to potential small business owners. Sometimes this assistance is direct financial payments in the form of subsidies to encourage investment in human or physical capital. In other cases, subsidies are in the form of free or subsidized advisory services in starting or developing small business or in specialized areas, such as exporting or the use of new technology. Taxpayers’ money may also be used to bribe individuals or organizations to behave in a way perceived to benefit both small businesses and the economy as a whole. These bribes often take the form of tax relief. For example, wealthy individuals may be given tax breaks to become equity participants in small or young businesses. Finally, some government procurement programs focus on small businesses, using taxpayers’ money to offset any efficiency losses to government by its having to contract with small businesses even if these are not optimal suppliers. The wide range of public support programs to small firms in developed economies and their appraisal is best reviewed in Organization for Economic Cooperation and Development publications ( OECD 1995 , 1996 , 1997 ). Given the huge variety of schemes, the diversity of countries in which the schemes are found and the often inflated ... log in or subscribe to read full text