G7 performance on entrepreneurship and SMEs
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G7 Summit

G7 performance on entrepreneurship and SMEs

Stephanie Bussiere

Stéphanie Bussière, researcher, G7 Research Group, looks at the G7’s below-average compliance in this area and the measures proven to increase it – including specific commitments for women

The G7’s governance of entrepreneurship and small and medium-sized enterprises is part of its overall global economic governance. Its performance on entrepreneurship has been rising in recent years. G7 leaders will want to continue this trend in the wake of the current global pandemic with its significant negative economic consequences. As the G7 leaders met virtually for their emergency on 16 March 2020 under the presidency of the United States, the impact of COVID-19 on the global economy was an important priority. Expectations are high for G7 leaders to again stimulate the economy through promoting entrepreneurship and SME growth.

Conclusions

G7 leaders first addressed entrepreneurship at the 1977 London Summit, with a focus on youth entrepreneurship. They first addressed SMEs at the 1985 Bonn Summit. Overall, the G7 devoted an average of 216 words, or 2%, of its communiqués per summit to this issue. These G7 communiqué conclusions were the second highest at the 1993 Tokyo Summit, with 11% of total words (366 words). They peaked at the 2019 Biarritz Summit with 13% of total words (943 words). The summits in 1978–1982, 1987–1989, 1991–1993, 2001, 2002 and 2010 made no mention of either entrepreneurship or SMEs.

Since 2015, G7 conclusions on entrepreneurship have focused on gender, particularly gender inequalities and entrepreneurial opportunities for women in developing countries. They placed relatively less emphasis on
youth entrepreneurship.

Commitments

Since G7 summits began in 1975, they have produced 75 collective, future-oriented, politically binding commitments on entrepreneurship and SMEs, as identified by the G7 Research Group. The first was one commitment made at the 1984 London Summit, and represented 3% of all the commitments made there. After 1993, the G7 consistently made commitments on entrepreneurship and SMEs except in 1997, 2000, 2001 and from 2009 to 2011. The peak came at the 1985 Bonn Summit, with 20% of the summit’s commitments made on entrepreneurship and SMEs. After 2012, the G7 made at least one commitment on entrepreneurship and SMEs at each summit. They totalled 29 between 2012 and 2019. Other peaks came at the 1993 Tokyo Summit, with 11%, and at the 2019 Biarritz Summit, with 13% of the summit’s total commitments dedicated to entrepreneurship and SMEs.

Compliance

Compliance with the G7’s entrepreneurship and SME commitments was relatively weak. The G7 Research Group has assessed three of the 75 commitments on entrepreneurship and SMEs for compliance by G7 members. It found average compliance of only 57%. This is well below the G7’s average compliance of 76% across all issues.

The two commitments on gender and women’s entrepreneurship made at the 2015 Schloss Elmau Summit had the highest compliance, with a combined average of 75%. The commitment related to SMEs in developing countries made at the 2007 Heiligendamm Summit had the lowest compliance, at 33%.

Germany and the United States had the highest compliance, with 100% each. Canada had the lowest compliance, with an average of 33%.

Corrections

G7 members can make two low-cost changes to improve compliance with their commitments on entrepreneurship and SME commitments.

First, research suggests commitments on women’s entrepreneurship and SMEs have higher compliance. G7 leaders should thus make more commitments on entrepreneurship and SMEs, especially gender-related ones.

Second, research suggests that holding pre- summit meetings of the ministers responsible for a particular issue increases compliance. The G7 labour ministers’ meetings in 2015, 2018 and 2019 made specific references to entrepreneurship and SMEs. In turn, the leaders in these years made more commitments on the issue than in the previous decade. This suggests a strong correlation between ministerial meetings discussing entrepreneurship and SMEs and commitments made at the following summit. Thus, the G7 labour ministers should regularly meet prior to the summit and make many commitments on entrepreneurship and SMEs.