Working Paper No. 1384

Improved Framework Conditions for a More Entrepreneurial, Innovative and Sustainable EU

Published: March 25, 2021Pages: 24Keywords: Entrepreneurship; European Union; Innovation; Institutions; Policy reform; Regulation; Self-employmentJEL-codes: L26; L5; M13; O38; O52; P14

Improved Framework Conditions for a More Entrepreneurial, Innovative and Sustainable EU Niklas Elert and Magnus Henrekson

In the wake of the corona crisis, the European Union must regain lost ground and create more favorable conditions for inclusive and sustainable economic growth. The best way to achieve this goal is by increasing the Union’s innovativeness. This effort requires extensive and broad-based institutional reforms aimed at strengthening the incentives for entrepreneurship.

Innovative entrepreneurship requires collaborations with numerous agents that provide those skills and resources that the entrepreneur is lacking: inventors, key personnel, demanding customers, and early and later-stage financiers.

Based on this ecosystem perspective, we propose reforms in the following six broad areas: (i) the rule of law and property rights, ii) taxation, iii) savings and finance, iv) labor market regulations and social security, v) entry and exit barriers in product markets, and (vi) human capital for entrepreneurship. The reforms would likely strengthen Europe’s innovation capacity at a time when it is needed more than ever.



Elert, Niklas and Magnus Henrekson (2021). "Improved Framework Conditions for a More Entrepreneurial, Innovative and Sustainable EU". IFN Working Paper No. 1384. Stockholm: Research Institute of Industrial Economics (IFN).

Niklas Elert


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Magnus Henrekson


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Interdisciplinary European Studies

The European Union and the Return of the Nation State


This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

About the book


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