Small businesses play an important role in creating jobs and invigorating markets. Since the mid-1990s, however, the number of small-business startups has declined, according to this year's white paper on small and medium-size enterprises. The question is how to reverse the trend. The report calls for ending decade-long deflation and creating conditions that encourage new business ventures.
Business closures have outnumbered new entries since around 1996 when deflationary effects from the collapse of the bubble economy in 1990 became more pronounced. "Businesses have become risk-averse amid protracted economic stagnation," the report says. "This has fostered a more conservative tendency toward business inauguration."
In the United States, by contrast, startups continue to outnumber closures, as aspiring young entrepreneurs play a predominant role. Significantly, this rising trend in small-business openings is adding vitality to the world's largest economy.