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Published: 12:46 AM, 24 March 2019

https://dailyasianage.com/news/169621/role-of-business-in-economic--development

Role of business in economic development

M S Siddiqui

Measuring entrepreneurship and its impact on development remains a challenge for many
reasons, including the existence of different definitions of entrepreneurship. To meet these
challenges related to monitoring the impact of entrepreneurship on development, a number of
indicators have been developed by various organizations, including the World Bank Doing
Business Report, GEM and Global Entrepreneurship Indices i. e. Global Entrepreneurship and
Development Index, the OECD-Eurostat Entrepreneurship Indicators Programme, the
International Consortium on Entrepreneurship, the World Bank Entrepreneurship Database and
others. There is consensus that economic development is depend upon entrepreneurs
particularly business entrepreneurs.

There are many categories of entrepreneurs in each and every profession. Business
entrepreneurs create businesses and new businesses create jobs, strengthen market
competition and increase productivity. The efficient business regulations are keys for a blooming
private sector and are important for overall development.

Entrepreneurs are driving force of economy. But up to 65% of outputs in these economies are
formed in the informal sector regularly because of too much bureaucracy and regulation.
Informal sector firms lack access to the opportunities and protections that the law provides but
even firms operating in the formal sector might not all have equal access to these opportunities
and protections.

The traditional model of business is start of a new business in response to unmet needs and
demands in the market. Entrepreneurs use to take an opportunity to provide a product or
service that is not currently in existence, or otherwise available.

The definition is too narrow and hardly recognizes the entrepreneurship ability of creating new
business. It has no mention of contribution to the economy by creation of employment and
creation of goods and services to meet the demand of the society. New businesses need to hire
employees. They create jobs and these economic opportunities uplift and support communities
through increasing the quality of life and overall standard of living.

When new businesses export goods and services to other countries and contribute directly to
export earnings and efficient production for the global society. This increase in revenue
strengthens an economy and promotes the overall welfare of a population. It create opportunity
of efficient use of manpower and natural resources by manufacturing products in efficient
location and export to the market having demand of those products.

This has never been truer than it is today, as we live in an increasingly interconnected global
economy. Foreign trade, according to some estimates, is responsible for over 90 percent of
economic growth in the globalized market. Bangladesh economy is integrated to global supply
chain with the tune of 75%.

Innovation is now precondition to promote economic development. The market is changing very
fast with innovation and change of choice of consumers. A widely-accepted definition measures
innovation using a set of criteria including how many new products are invented, the percentage
of high-tech jobs, and the size of the talent pool available to tech industry employers. More
recently and increasingly, the definition of innovation has expanded to include the development
of new service offerings, business models, pricing plans, and routes to market.

The ability to turn ideas into new products and services that people need is the fount of
prosperity for any developed country. Periods of rapid innovation historically have been
accompanied by periods of strong economic growth. Technology has made it possible for small,
entrepreneur-led businesses to expand into regional and global markets. Economic growth is
driven by new technologies and their creative applications. The impetus of innovation is the
greatest natural resource of all: the human mind.

Creating innovative products and solutions requires an educated population and an environment
where collaborative work can take place. In addition to being good for business, education
increases workforce creativity and quality of life.

Innovative business practices create efficiency and conserve resources. Innovation in

agriculture is especially relevant for addressing socioeconomic challenges (in addition to
encouraging economic growth). New and growing businesses represent the principal sources of
job creation and innovative activity in an economy, two factors that generally result in the rising
standards of living for all.

It's important to understand that entrepreneurship and innovation are dependent on access and
participation. For entrepreneurs to bring new ideas to life, they need access to education and a
level-playing field on which to compete. In this vein, the role of government leaders and public
policy is to create conditions that allow more entrepreneurs to start businesses by implementing
policies which nurture that environment so those businesses can grow.

Economic growth suffers when entrepreneurial activity is unevenly spread socio-economically,

demographically, and geographically. Under the right conditions, entrepreneurs have an
incredible power: they help regional areas prosper economically, and they also serve society as
they help engineer innovative solutions to problems and challenges. Entrepreneurs should not
be held back by expensive, complicated procedures. That is essential for the creation of
employment opportunities in developing countries.

Economic growth is an important weapon in the fight against poverty and hunger in developing
countries. The government therefore encourages these countries to develop their private
sectors. For example by helping entrepreneurs build their knowledge and skills. Entrepreneurs
should be encourage to invest with some policy initiatives namely: increasing access to
markets; good legislation; reliable official bodies and other organizations; good infrastructure;
and excess to financial services, etc.

Entrepreneurs are leaders willing to take risk and exercise initiative, taking advantage of market
opportunities by planning, organizing, and employing resources, often by innovating new or
improving existing products. The ability to lead a business, take responsibility and the
willingness to take risks in order to gain the rewards makes an entrepreneur.

An entrepreneur will continuously enhance his skills in all areas, will keep looking for new
opportunities to provide better value to his customers and will do more than what is expected,
providing help out of the way. He will continuously expand his network by providing additional
help, not only through himself, but through his network as well.

His relationships with the manufacturers, suppliers and customers will be flexible with a view to
provide convenience, and a higher value for their money to them. As against a normal
businessman who uses opportunities, entrepreneurs not only use existing opportunities but
create opportunities, through expanding in value chain, and/or generating new ideas, to get
better value.

There is increasing consensus that entrepreneurship is key to sustainable development and

critical to poverty reduction, gender equality and environmental sustainability. Entrepreneurship
policies have a multifaceted nature and linkages with other areas, such as education and skills
development, technology and innovation, finance and capacity-building.

Global society has a growing recognition of the role of entrepreneurship in sustainable

development, key trends include increased attention to a holistic approach to entrepreneurship
policies and their implementation, the growth of women's entrepreneurship, and youth and
social entrepreneurship.

In 2012, UN adopted resolution on entrepreneurship for development. UN General Assembly

highlights the need for a comprehensive framework for entrepreneurship promotion and calls
upon the relevant organizations and bodies of the UN system to further recognize and integrate
entrepreneurship in their development polices, and in cooperation with Member States, improve
regulatory environments and policy initiatives that facilitate entrepreneurship, as well as identify
indicators that can be used to evaluate the success of entrepreneurship policies.

Bangladesh concurrently holds the greatest opportunities with majority of population are below
age of 40. The common challenges faced by young entrepreneurs in Bangladesh are regulatory
barriers, source of fund and technology.

We should aim at creating a support system for youth-led enterprises with reform in regulations,
easy transfer of technology and financial resources. Furthermore establish better infrastructure
to support start-ups, specifically including more effective incubators.
Policy makers need to create structured long term funding schemes with extended moratorium
periods to support young entrepreneurs in the start-up stage and smooth run of business under
self-regulations with minimum bureaucratic control. The bureaucratic control is expensive and
regressive of creation of new business and development of entrepreneurship.

The writer is a legal economist. Email: mssiddiqui2035@gmail.com