The Role of Development Entrepreneurship and Small and Medium Entrerprises in Managing Structural Changes

Small and medium-sized enterprises, under the direction of entrepreneurs, are considered to be the driving force of economic growth and development. Entrepreneurship is associated with job creation, innovation, welfare distribution, poverty reduction and an increase in economic performances of a country. In the last decade, there has been an increasing recognition of the role of entrepreneurs in economic development of Serbia. The main objective of the chapter is to analyse development of entrepreneurship and its contribution to economic development of Serbia over the 2006-2010 period of time by using the methodology initially developed by Venesaar and Loomets (2006), and adjusted to the objectives of this study and to the available data. The methodology assesses the development of entrepreneurship through SMEE sector development and new firm formation activity over the observed period. The measured firm formation rate indicated relatively strong but insufficient intensity of entrepreneurial activity. The empirical analysis shows a relatively stable activity in firm formation over time in terms of the average annual number of registrations per 1,000 active inhabitants and more significant variations in terms of the ratio of new firm registrations to the registered stock of businesses at the end of the year. The data also show a positive and significant relationship between firm formation rate and employment generation as an important indicator of economic development.