The Entrepreneur in Rule-Based Economics by Georg D. Blind

Author:Georg D. Blind
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

10.3 The Role of Government Policy

This section reviews policy measures directly influencing individuals’ decisions in favour of or against self-employment: direct public financial assistance, tax schemes and a number of supply-side measures. All rules relating to government measures are classified as 0th order constitutional rules. As population size for constitutional rules (number of law-abiding agents) only changes when the reach of government changes, we cannot employ criterion 1 to effect the reduction from SFR to CSS. Therefore, we will rely on criterion 2, checking the intensity at which the relevant rules become effective in the economic system.

To determine the importance that the government attaches to the promotion of new businesses, we need to look at the structure of central government budget available for SME policies. In Japan, central government provides funds and guidelines, while regional authorities are charged with implementation. Hence, the central government budget offers an appropriate point of departure for analysing the weight attributed to the promotion of business formation compared to supportive measures for existing SMEs. Figure 10.8 illustrates the structure of the 2007 central government budget for SME measures.

Fig. 10.8Structure of the 2007 federal budget for SME policy, billion yen. Source: MoF (2007: 42)

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