How development of entrepreneurship may have positive impact on the economic development of a country? Discuss.

or, Entrepreneurs and entrepreneurship are the catelyst in the process of economic development of a country. Discuss.
or, "An economy is the effect for which entrepreneurship is the cause."- Explain.

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Entrepreneurs, entrepreneurship and economic development of a country are intimately related. J. Schumpeter opines that entrepreneurial process is a major factor in economic development and the entrepreneur is the key to economic growth. A statistical research has showed that small industries have grown faster than large industries over the last couple of decades. The role of entrepreneurs and entrepreneurship is not just limited within the above reasons. There are lots more reasons for the topic that certifies that entrepreneurs and the entrepreneurs are the catalyst in the economic development of any country. The reasons are shortly gleaned below:-

Employment generation

Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment. By starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.

National Income

The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurs are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income.

Balanced Regional Development

The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development when the new entrepreneurs grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.

Dispersal of economic power

Industrial development normally may lead to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurs helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

Better standards of living

Entrepreneurs play a vital role in achieving a higher rate of economic growth. Entrepreneurs are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements. When the price of the commodities decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people.

Creating innovation

An entrepreneur is a person who always looks for changes. Apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always tries to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation.

Capital formation

Entrepreneurship helps to form capital through the mobilization of the money that might have been kept as savings by the public.

Eradication of social problems

As unemployment is the root of all the socio-economic problems thus the entrepreneurship eradicates all the socio-economic problems through the removing the unemployment by providing large scale employment.

Other important roles of entrepreneurship

• It stimulates the equitable redistribution of wealth, income and even political power in the interest of the country.
• It encourages effective resource mobilization of capital and skill which might otherwise remain unutilized and idle.
• It also induces backward and forward linkages which stimulate the process of economic development in the country.
• It also promotes country’s export trade which is an important ingredient for the economic development.

Thus it is clear that entrepreneurship serves as a catalyst of economic development. On the whole, the role of entrepreneurship in economic development of a country can best be put as “an economy is the effect for which entrepreneurship is the cause.”

Source: Here

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