The role of entrepreneurship is not the same in all countries. It depends on the industrial climate, material resources, and the responsiveness of the country’s government. Previous economists like David Ricardo and Adam Smith believed that the importance of entrepreneurship has nothing to do with economic development. But, as time passes, the concept is changing. And now, we see the growth of countries like Japan, America, and Russia who knew why entrepreneurs are important to the economy. Now the under-developed countries also take their lessons and giving more scope to entrepreneurs.
They realize that to achieve economic development, it is necessary to increase qualitative and quantitative entrepreneurship.
Only risk-takers like entrepreneurs can utilize the potential resources of a country, i.e., labor, capital, and technology.
They bring innovations and develop new ways of living.
They provide a large scale employment and even distribution of money in all classes.
In short, they promote a better lifestyle.
Here in this article, you will see the importance of entrepreneurship in a country’s economy and growth.
Who are entrepreneurs?
Entrepreneurs are a business leader who looks for new ideas and implements them into actions and fosters the growth of a country in this process.
He is like a trigger head who gives spark to economic growth through his innovative decisions.
To become an entrepreneur, one needs initiative skills and motivations.
There should be a hunger for achievements and appreciation in entrepreneurs.
He should have guts to risk his everything and start afresh.
Also, he must have leadership qualities in him to tackle people from various family and educational backgrounds.
It is like a game of cards, and you will have to choose the right cards at the right time and in the right place to become one of the successful entrepreneurs.
Here are the contributions that entrepreneurship makes for a country’s economy.
Entrepreneurship promotes capital formation.
The most important use of entrepreneurship is that it increases the gross capital of the country.
Entrepreneurs invest their money in their business and seek other investors to do so.
Entrepreneurs also encourage the public to invest money in productivity rather than idle saving.
And with successful entrepreneurship, they deliver profit on your capital and thus encourage more investments.
This makes the country’s economy run smoothly and even prosper with time.
Entrepreneurship reduces the concentration of economic power.
The concentration of economic power is due to industrial and economic development.
In this case, the power and wealth come to a few business leaders.
Then they get so much power that they can even run the economy as they want.
This increases the dependency of the lower class on the upper class.
Here the share of profit is only taken by the business heads.
But entrepreneurship reduces this risk.
A lot of entrepreneurship is needed to reduce these monopolies and divide the profit into all classes of people.
Anyone can start up a business, and anyone can buy the shares of it.
The power thus will be divided among people.
And the more empowered people mean more economic development.
They create large scale employment.
One of the chronic problems of the underdeveloped country is unemployment.
The significance of entrepreneurship development here is to generate large scale employment scopes.
Both small and large scale startup businesses can provide job opportunities for all class people.
Skilled labor is equally important here, like an educated employee.
Entrepreneurship does not only provide direct employment, but it can trigger indirect job opportunities too.
The worst thing for a country’s economy is unemployment, and to be precise the educated unemployment.
In a highly populated underdeveloped country like India, the government can only satisfy 5% of the youth by giving them government jobs.
But the entrepreneurship introduces new ideas and implement them.
And with their success, they combine more workforces.
Thus it becomes easy for a youth to find a job with more entrepreneurship in a country.
Therefore the importance of entrepreneurship is to end up the country’s unemployment to boost its economy.
They help in wealth creation and distribution.
The wealth generated in these types of business is distributed in all sections of a country, which is the result of the hard work from entrepreneurs.
The amount may vary according to the skill of the employee.
But for a large prospect, it stimulates equitable redistribution of profit.
Irrespective of class creed gender and geographical region, the employees of the same education and working skills will get the same amount as their salary.
Entrepreneurship promotes regional development.
Budding entrepreneurship often builds its business in small towns or village areas to avoid competition and extra expenses.
This, in turn, helps the rural economy to grow overnight.
A successful business industry brings interested job seekers.
They get jobs and promotions with time.
The employees then settled there.
Also, it requires development in roads, schools, residential buildings, parks, malls, and entertainments.
This creates a huge scope for indirect employment for construction workers, daily wagers, and shop owners.
Development in industries like health, education, and road transport changes the structure of the area.
In short, it can elevate rural life and change it into an urban.
It increases per capital income and gross national product.
The entrepreneurship always looks for opportunities.
Entrepreneurs explore and exploit it.
They encourage resource mobilization of skill and capital.
And they bring in new products or services and thus develop the market for economic growth.
In this way, they ultimately help in increasing the gross national product and per capita income of the people.
The increase in per capita income means the increase in overall demands.
People will buy more as they can afford more.
And the more people spend, the more it is good for the economy.
It shows the development of the country’s economy.
Entrepreneurship creates innovations.
If your question, why are entrepreneurs important to the economy?
Then the best answer will be that the entrepreneurs make innovations.
Entrepreneurs always look for changes.
Apart from combining old factors of production, they introduce new ideas and new combinations of factors.
Entrepreneurs try to achieve newer and newer methods of production of goods and services.
Thus, the importance of entrepreneurship delivers economic development through innovation.
It improves the standard of life.
The relevance of entrepreneurship also lies in the fact that it increases the standard of living.
Entrepreneurs develop their consumer’s standard of living by constantly adopting the latest innovations.
Moreover, entrepreneurs adopt these innovations on a wide variety of products at comparatively lower prices.
They try to be better and affordable than their competitors.
This enables the consumers to avail of better quality products at lower prices.
This ultimately results in the development of their standard of living, which entrepreneurs strive to achieve.
Entrepreneurship creates new business.
Entrepreneurship encourages new scope for a new business.
Innovative and path-breaking ideas by them in the form of goods and services result in new employment.
This makes the wheel of the economy to glide smoothly.
The business or sectors related to the new venture also witness success.
For instance, in 1990, a few IT companies in India founded the IT industry as a backbend programmers’ hub.
But soon, it developed as a singular industry.
But more importantly, millions from other sectors and industries also get benefit from it.
The related other types of businesses, like call center offices, hardware providers, and network maintenance companies, also flourish there surrounding it.
Information technology includes many education and training institutes in the syllabus to nurture students to become high-paying IT workers.
The real estate industry and infrastructure development companies also grow there as many workers migrated to the employment hub.
Thus, the success of one startup can become the cause of many other entrepreneurs one of the importance of entrepreneurship.
It can set an example, clears the path, and financially support a new business.
Entrepreneurship put new ideas into practice.
One importance of entrepreneurship is that it encourages more youth to try new ideas.
It encourages them to dream big and fight for their dream.
When they see role models who succeed from nowhere, they also get courage.
This process will go on for generations.
The upcoming generation will try even harder to give the best services they can.
Their ideas can even cause social changes.
The invention of sanitary pads improves the lives of women in the world.
But people won’t stop there.
They invent tampons and menstrual cups for providing more comfort and ease to women.
And these creations contribute a lot in women’s liberation both mentally and physically.
So innovate today to inspire the upcoming future.
Entrepreneurship promotes the export trade of the country.
Entrepreneurs are important to the production of goods and services of a country.
And with their quality and affordable products, they help in promoting the country’s export-import business.
And export-import is essential for the wellbeing of a country’s economy.
Entrepreneurs can produce the goods that the country imports largely and make their country self-sufficient.
On the other hand, entrepreneurs can produce new products and export them to gather some foreign money.
They can also produce the goods that the country already exports to satisfy the local and global market more.
This will balance the country’s economic structure with the world economy.
The inflation rate will be well balanced.
In short, the import substitution and export promotion will ensure economic development and independence of the country.
Entrepreneurship creates social reforms.
The unique discoveries that entrepreneurs introduce break the age-old norms and traditions.
It indirectly supports freedom by reducing dependence on obsolete systems and technologies.
This gives an equal chance, greater morale, better lifestyle, and economic freedom to the countrymen.
For example, the areas suffer from water loss will, at times, force the citizen to stop their work to fetch for water.
This will impact their jobs, business, productivity, and earnings.
What will happen if you structure a low-cost, automatic, unique, flow-based pump for them?
What if the pump can fill the water containers automatically at their homes?
This type of creation from entrepreneurs ensures that people focus on their careers and professions rather than necessities like water.
You can recycle plastic and reuse it in plastic roads that are durable and long-lasting.
You can thus actually save thousands of lives that get injured during monsoon and potholes.
Also, entrepreneurs save thousands of money from the government because the plastic roads require almost zero maintenance.
Entrepreneurship induces backward and forwards linkage.
The importance of entrepreneurship is dependent on profit.
Thus entrepreneurs try to maximize their profit by reducing competition and nurturing innovation.
They work in an environment of change.
They promote change.
So in an enterprise that solely depends on changing technology, backward and forward linkages are very important.
And backward and forward linkages stimulate the process of economic development in a country.
The overall development by entrepreneurship:
The entrepreneurs are like catalysts.
They change entrepreneurs will make chain reactions for centuries.
Once one enterprise is established, then the process of industrialization goes on.
The unit will create demands for various types of units related to it.
And so many other units will be there which require the output of this unit.
This will increase the demand for the area as a whole as they are all interconnected.
In this process, the highly qualified programmer will benefit as well as the construction worker.
The country will develop as a whole.
And everyone will get the same chance to develop their living, and that is the usefulness of entrepreneurship.
The bottom line
Though the importance of entrepreneurship is high for a country’s economic development, an excess of anything ruins it.
A high rise in this field also causes too much competition and, as a result, job loss.
Not all entrepreneurship will see success.
And with too many entrepreneurs, the level of aspirations will only rise.
With too many chefs and no cooks, the dish will remain unfinished.
There will be no one to fulfill your orders.
Too many types of business in one field can also lead to financial loss and income inequalities.
For a successful outcome, thus, a systematic and balanced approach is needed.
To begin a new company, therefore, you need to know the advantages and the disadvantages of that field.
You need to target your audience and promote your product in front of them.
You need to open your eyes and mind for improvement and changes.
And with a successful venture, you will create a future of not only yours but also for others.