Youth Entrepreneurship and the EU Crisis: Causes & Effects
Youth Entrepreneurship in Spain
Introduction
The goal of this study is to analyze the background of youth entrepreneurship in Spain. This report consists of three sections: the main causes of the scarce youth entrepreneurship, their consequences, and a conclusion.
Causes of Scarce Youth Entrepreneurship
Although the youth unemployment rate in Spain is above 30%, only 4% of young people have chosen self-employment as a professional path. The main cause of low entrepreneurship among young people is a high degree of risk aversion. Thus, the idea of undertaking a new task simply does not exist, and, socially speaking, having a steady job has become the goal of most young people.
This situation has its roots in the current education system, where entrepreneurship is not a subject. Creating a business or company requires not only technical know-how but also other skills that universities often overlook in their teachings.
Furthermore, many young people do not find the necessary support in their families to undertake entrepreneurial ventures. Additionally, another key factor contributing to scarce entrepreneurship in Spain is the difficulty in obtaining economic support.
Impact on the Economy
Entrepreneurship is an important source of wealth and employment, especially in periods of crisis. In addition, it can also contribute to the necessary change in the productive model that the Spanish economy needs. Therefore, if entrepreneurship among young people is limited, new products, technologies, and services are not introduced into the market. Furthermore, there are fewer new job opportunities in the short and long term, and the productivity of firms and economies is reduced.
Conclusion
This study has illustrated the causes of the lack of entrepreneurship among young people and its effect on the economy. Accordingly, it shows that education and the scarcity of subsidies are probably the most important reasons for the current situation in Spain. Therefore, this study could drive a change in the Spanish productive model.
Reasons and Effects of the Crisis in the EU
Introduction
The goal of this study is to analyze European policies, their causes, and their effects.
This report examines two dimensions: the origin of the European crisis and its impact on European economies.
Causes of the European Crisis
The beginning of the crisis in Europe was triggered by the contagion that economies suffered on a global scale. It began in the US with the subprime mortgage crisis and the reduction of the interest rate by the Federal Reserve.
Another cause that explains the European economic crisis is the significant commercial imbalance that existed. The difference in the labor unitary costs that existed between the different European countries led to countries with major costs suffering a rapid growth of unemployment. After this growth, the consumption of these countries fell, provoking a great crisis of demand.
The impossibility of devaluing the currency was another reason for the crisis. Belonging to the Eurozone implies a common monetary policy. A devaluation of the currency favors commercial scale because countries that put this monetary policy into practice obtain major competitiveness. Thus, the member states could not put this policy into practice and could not improve their commercial scale.
Effect of the Crisis in Europe
Investors fled from the least secure countries. This resulted in a high growth of the interest rates of the debt. To face the payment of the debt, the affected countries were obliged to make strong fiscal adjustments to try to pay the debt.
The fiscal cuts supposed a negative shock in the economies of these countries. Beyond this shock, social aspects were seriously affected, worsening the lives of the citizens. All that derived to the disappearance of the European middle class in these countries.
Conclusion
This study has illustrated the causes of the crisis, showing that subprime mortgages were the beginning of the economic instability. Another line of research could be the structural problem of the system in Europe.