In a climate of austerity is it right for government to support small Essay

In a climate of austerity is it right for government to support small business - Essay Example There are also people who advocate that government should not intervene at all and should let the forces of market prevail. So there are many differing opinions about areas where government should or should not spend money of tax payers. In this essay we will argue why governments should support small businesses even in a climate of austerity. It is not only economically but socially also desirable for any economy if small and medium enterprises are encouraged. These small businesses can provide employment and at the same time can boost economy by increasing consumer spending. The arguments against government support to small and medium enterprises will also be studied in order to understand both sides of the debate. There is no doubt that these are tough times for the economy but it is not logical to curb spending in areas that will reap positive cash flows in future. Support for small businesses should be seen as an investment. This is the reason why governments should support smal l businesses even in a time of economic austerity. Why Government Should Support Small Businesses? This portion of the text will be devoted to the understanding of the reasons for government support of small businesses. There are many reasons why government should support small and medium enterprises. The effect of support to small businesses is seen directly in a country’s economy. ... With the support of government small businesses can help an economy increase its GDP. Economists argue that growth of GDP can solve many problems of a country. If economy is growing at a good pace then it is an indicator that the country is going in the right direction. These are tough times for the whole world and countries are still trying to recover from the crisis of 2008. In these times focus of the governments should be on increasing Gross Domestic Product of the country. More GDP means growth and growth in an economy can fight every crisis. It is actually a stimulus for the economy as whole. Small business can help governments do that and the money that is needed for small business support is very small as compared to the other methods of increasing growth. It can be safely concluded that governments should spend money in order to support small business even in a climate of austerity because it will help the economy recover from the very crisis it is going through. The role of government in this regard can be substantial and development and growth of small businesses are dependent upon government policies regarding small and medium enterprises (Li & Matlay, 2006). The best way through which small businesses can help solve problems of any economy is by creating jobs. Unemployment is a very awful thing for an economy because as a result government revenues decrease and more and more people become dependent on the state instead of earning for themselves. The problem of unemployment can be reduced, if not resolved, by supporting small and medium enterprises. These small businesses will provide the people with the job opportunities that they desperately need.