Importance and Role of Entrepreneurship In Economic Development: Entrepreneurship is a highly dynamic technique for developing incremental income and customizing things of value. It offers society with a great sort of products and services along with boosting the growth of welfare. In common practice, the entrepreneurs are considered as motivated people who have necessary courage for achieving the desired goals.
Importance and Role of Entrepreneurship In Economic Development
The word “development” is being used in various ways but there is a mystery behind its accurate connotation. Nonetheless, the meaning of economic development is to grow in an upward direction from a long period. But the highlighted question arises is that: What leads to economic development?
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This question has grabbed the attention of many scholars from decades. So, in this article, we are going to shed light on the significant realms of that big question and that is Entrepreneurship’s Phenomenon.
Entrepreneurship has become a vital factor in the economic growth and standard of living of the nation. Every entrepreneur works hard to establish a business to provide butter and bread to their family as a small business owner or by commencing a small venture. Not only for the family but they are doing a favor to the society, region, local community, state, and the nation.
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Role and Importance of Entrepreneurship
The key to the establishment of a new venture is the Entrepreneur that boosts up the economy and rejuvenates the established business firms that maintain the structure of an economy. The role of entrepreneurship in the development of an economy of a nation is explained under the below headings. Let us have a look at these below.
- New Job Creation
There is a great share of jobs created by Entrepreneurship companies all across the globe. They provide lots of entry-level jobs that allow the unskilled workers to get training & necessary experience.
In fact, a large portion of employment is created by small companies annually. That’s not all; they create and provide experience workers to the large scale companies.
- Community Development
A community can work pretty brilliantly if the employment base gets divided into lots of small entrepreneurial companies. It helps in making sanitation standards better and boosts the top level of home ownership.
Additionally, it can provide extra stability and a better quality of life to the community.
- National Income
Do you know there is a great sort of wealth generated by entrepreneurial ventures? No doubt present businesses are pioneers in present markets. However, the entrepreneur firms are also not any far behind as they are the ones who bring new wealth to the nation.
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- Boosts Standard of Living
If you don’t know, the living standards are calculated based on the consumption of goods and services in a certain time by a household. It greatly depends on the presence of diversified units.
So, there are great types of products provided by entrepreneurship. On top of that, they increase the income of individuals who work for them.
- Promotes Research & Development
As we all know, innovation is the greatest pillar of entrepreneurship, and that’s why you will see entrepreneurs with lots of innovated ideas that they test by experiments.
The thing that we want to say is the funds for research & development are provided by entrepreneurship. In simple words, things like general development and research are boosted by it.
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Entrepreneurs have become one of the major corner stores of self-reliance across the globe. The reason behind that is they assist creates wonderful substitutes to the imported units that minimize the dependence on other nations.
Apart from that, it gives nations possibility to export products and solutions to foreign countries that allow them to gain national exchange. In simple words, we want to tell that economic independence ensured by entrepreneurs.
- Expanding Existing Companies
There is a great role played by entrepreneurship for boosting the innovations, development, and expansion in a company.
Entrepreneurs make the desired efforts for boosting the number of units in their present companies. Additionally, it helps in boosting the existing production techniques for expanding the network across the globe.
- Capital Formation
Entrepreneurs can mobilize the savings of public through the industrial securities issues. When the public savings has invested in the industries, then there is a optimum utilization of national resources. Owing to which the capital formation rate inclines which is necessary for the quick economic growth. This is the reason why an Entrepreneur is the wealth creator.
- Make improvements in Per Capita Income
An Entrepreneur creates and locates opportunities. All the latent, as well as idle resources such as land, labor, and savings, have converted into national income in the form of goods and services. It is utterly important to maximize the national product as well as per capita income of a nation, which is a standard to measure economic growth.
- Pool of opportunities
An Entrepreneur always generates employment options directly as well as indirectly. Directly, setting up of a venture and working as an independent entrepreneur to live an honorable life. On the other side, they offer million of jobs to residents by commencing a large and small business firm. Thus, it reduces the problem of unemployment in the nation and also provides individual growth too.
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- Development of regions
Regional disparities are easily removed by these public and private Enterprises to maintain balance in economic development. They establish industries in remote areas to get benefits of various concessions as well as subsidies as provided by the central and state government of a nation.
- Improving the standard of living
An Entrepreneur always introduces some commodities and products that are essential but their availability is low. The mass production of goods and manufacturing of handicrafts by small scale industries in the countryside areas helps to enhance the standard of living of an ordinary person. Not only the availability of necessary products but it also provides the same at a pocket-friendly price and increases the consumption variations.
- Economic Independence
Entrepreneurship plays an important role in national self-reliance. Industrialist always makes efforts to produce umpteen substitutes of previously imported products and thus, helps to reduce the dependency for goods on other foreign nations. Also, these goods are exported to other nations and assist the nations to maximize their foreign exchange for the nation. Export promotion on the one side and import substitution on the other side make sure to decrease the dependency on other nations.
- Several linkages
When an industry is established to produce some products, then it has a chain reaction due to the demand for raw materials. Commencement of a business firm has several backward as well as forward linkages. To exemplify, the startup of a steel plant produces various ancillaries and thus, increases the demand for iron ore, coal, and so on.
These are backward linkages offered by Entrepreneurs. By maximizing the steel supply, it facilitates the machine-building growth, manufacturing of utensils, and some other units.
- Creation of wealth and sharing
By kick start a venture, an Entrepreneur invest own resources as well as grab the capital in the form of debt and equity from investors and lenders. Further, they use public funds and enable people to grasp the lucrative deals as their money grows with business growth. It is helpful in the creation of wealth and distributing it for the sake of economic development.
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- Consumer’s demand
A wide range of products is produced by Entrepreneurs according to the taste and demand of people. Without any shortage of products, they fulfill the demand of the consumers and let them buy what they are looking for. Thus, all the demands of buyers fulfill within the nation and it eliminates the export of foreign goods.
- Social benefit
They motivate democracy as well as self-governance. Moreover, they help to reduce the rate of social problems such as lack of job opportunities, low standard of living, self-dependency, and so on. It is a good way to distribute the national income equitably among society’s participants.
- Capital Market’s Growth
Investment is the base for starting up a venture. An Entrepreneur raises funds for investment in the business through investors as well as financial agencies. The public is engaged in the trading of shares and debentures with some financial providers and it leads to the growth of the capital market.
- Infrastructure growth
The economic development of a nation depends on the development of the infrastructure. Entrepreneurs are always in favor of growing backward and countryside areas intending to utilize resources and also, generate employment opportunities. To develop the business in such areas, they insist the government develop the area’s infrastructure.
- Trader Development
An undeniable role has played by an Entrepreneur in the growth and promotion of domestic as well as foreign trade. Various financial institutes assist in the form of trade credit, overdraft, cash credit, secured loans, unsecured loans, and short term loans. Such investment funds lead to trade development across the country.
- Economic Integration
By establishing various business ventures across the regions of the nation, the power of creating employment opportunities is not in few hands. Entrepreneur adopts various economic policies as well as laws related to business as framed by the concerned government. The disparity between the rich and poor reduces by adopting the same rules for the effective functioning of business operations in the nation.
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- Raise foreign Capital
Entrepreneurs not only attract funds from domestic investors but also raise their investment from the individuals and institutions situated in foreign countries. In such a way, it increases the flow of foreign capital in the nation and results in economic development.
- Export Promotion
The products produced by a business firm are not providing to the citizens of a nation but they also export the same globally. Thus, it reduces the burden on the balance of payment of a nation by exporting their goods. Moreover, they also earn some foreign exchange in the nation.
- Innovative solutions to problems
To cope with the familiar problems of a nation, the business firm engaged in the concerned field always tries to figure out the novel solution. An Entrepreneur can test the new approaches that not even used before and this is a highlighted point that leads to the economic growth of a nation. The solution to such problems can be in the form of services or goods.
To exemplify, an amazing step by Paytm is the best example to digitalize the transactions when there was demonetization in India and people were not able to do essential transactions due to lack of cash.
- Inspire others
The creation of an enterprise gives a chance to other people for getting involved in the Entrepreneurial venture and get valuable experience. It inspires other teammates and employees to kick start a business and develop some innovative products and services in favor of the economy. The inspirational process helps in the formation of a chain reaction and contributes to the economy by enhancing more healthy Entrepreneurial activities.
- Development in the production techniques
Various conventional ways to produce and manufacture a product is used in the last few decades. But with the development of new Entrepreneurial activities across the nations, there is some promotion of new techniques that use fewer resources and generate more benefits. It reduces the cost of production and similar results in budget-friendly products. There is a positive impact on the economy of a nation by adopting creative technologies.
- Ambassador to social changes
In an economy, Entrepreneurs acts as ambassador by promoting new and creative technologies. The entire inventions provide a cultivated scientific look to the people and help them in leaving the conventional beliefs and ideas.
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- Enhance the human development index of an economy
Entrepreneurs always influence the people of a nation and assist them to get involved in the novel activities and technologies. It provides various opportunities for people and let them upgrade their knowledge by accepting and using new technologies. It results in the development of human resources and has a positive impact on the Human Development Index of a nation.
The role and importance of Entrepreneurship in economic development changes from time to time-based on the availability of resources, climate of industries, and how responsive the political system is. More contribution has done by Entrepreneurs in favorable conditions as compared to the nations with unfavorable opportunity conditions.
It is crystal clear that Entrepreneurship acts as a catalyst in the development of the nation’s economy.