Ambreen shafiq

ENTREPRENURESHIP Class assignment no.1

Role of an Entrepreneur in Economic Development

Who is an entrepreneur? The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important inputs in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. An entrepreneur is someone who manages and organizes any form of business. Who has the capability to take initiatives, motivate others, work in a team, and become a leader? He is a man who starts his own venture not seeking for a job but providing many people a hope of life. Why Entrepreneurship Entrepreneurship plays an important role in case of economic development of a country. A lot of problems of our country would be solved if people will start considering entrepreneurship as the first option for their career. Need for Entrepreneurship Development Economic development essentially means a process of upward change whereby the real per capita income of a country increases over a period of time .Entrepreneurship has an important role to play in the development of a country. It is one of the most important inputs in economic development. The number and competence of entrepreneurs affect the economic growth of the country. The economic history of the presently advanced countries like USA, Russia and Japan supports the fact that economic development is the outcome for which entrepreneurship is an inevitable cause. The crucial and significant role played by the entrepreneurs in the economic development of advanced countries has made the people of developing and under developed countries conscious of the importance of entrepreneurship for economic development. It is now a widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of the countries availability of resources such as labor, capital and technology. The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favorable

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ENTREPRENURESHIP Class assignment no.1 opportunity conditions than in economies with relatively less favorable opportunity conditions.

The major roles played by an entrepreneur in the economic development of an economy are discussed in a systematic and orderly manner as follows. (1) Promotes Capital Formation: Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealth, which is very essential for the industrial and economic development of the country. 2) National Income: National Income consist of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. 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 entrepreneurers are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income. National Income National Income consists of the goods and services produced in the country. The goods and services produced are consumed within the country and can also be exported to other countries. 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. The manufacturing rate of any developed country lies between 60% 70%. But unfortunately in our country this rate is below 40 %. If you want to become a great entrepreneur or want to do something for your motherland, become a manufacturer not just go for a service industry. (3) Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up.of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective

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ENTREPRENURESHIP Class assignment no.1 role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. 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 both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment. Employment One of the greatest problems of our country is Unemployment. Lets see how entrepreneurship tackles with this problem. Current employment opportunities can only cater 5 10 % of population. Entrepreneurs generate employment both directly and indirectly, directly by self employment as an entrepreneur and indirectly by starting many industrial units where they offer jobs to millions of people. Thus entrepreneurship is the best way to fight with the evil of unemployment. (4) Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. A setting up of more industries leads to more development of backward regions and thereby promotes 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 entrepreneurers 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. (5) Reduces Concentration of Economic Power: Economic power is the natural outcome of industrial and business activity. Industrial development normally leads to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a

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ENTREPRENURESHIP Class assignment no.1 large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population. 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 entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly. (6) Wealth Creation and Distribution: It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy. (7) Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities,, encourage effective resource mobilization of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. (8) Improvement in the Standard of Living: Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living. Better standard of living Entrepreneurs play a vital role in achieving a higher rate of economic growth. They 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 of the commodities decreases the consumers get the power to buy more goods for their satisfaction. There is a great demand of such entrepreneurs who can make this thought possible.

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ENTREPRENURESHIP Class assignment no.1 (9) Promotes Country's Export Trade: Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development. (10) Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximize profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. (11) Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, 12) 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 try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation. 13) Creating solutions for society: An entrepreneur is a person who creates solutions not only for the problems of his business but for the whole society. Entrepreneurs play a key role for innovations and creative ideas that solve different problems in the world with the efficient use of technology. What is needed or desired should be created with appropriate use of technology. This gives a clear thought of creating solutions with technology! Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country.