In this article, we are going to discuss the role of entrepreneurship in economic development.
Indian Economy has got a distinct identity. The Economy of the country is supported by the huge size of the population, the considerable size of the area, a wide variety of natural resource, the existence of various productive sectors and growing size of the market along with growing economic problems.
In such Economy, development of a sound industrial sector can play an important role for all-round development of a country. The role of Entrepreneurship for economic development is very beneficial for our country.
List of Some Importance of Entrepreneurship in Economic Development
The Role and Importance of Entrepreneurship in Economic Development of a Nation is Discussed Below:-
1. Generates Employment-
Unemployment is growing at a rapid rate in developing countries, particularly the unemployment among educated people, is an acute problem of most of the developing countries. Under these circumstances, the Entrepreneurs play a vital role in getting employment for themselves as well as they create a number of jobs for many unemployed people. As time passes, these entrepreneurs grow manifold and provide direct and indirect employment to many more.
Hence. Entrepreneurship is the best solution to solve the social problem of unemployment.
2. Increases National Income-
National Income comprises of goods and services produced in a country in one year. The goods and services are produced to meet the requirements of our country as well as to meet the demand for exports.
The increased number of Entrepreneurs meet the domestic demand and export demand by producing goods and services in the desired quantities.
Therefore, an increase in goods and services helps in increasing the national income of a country increase in goods and services helps in increasing the national income of a country.
Increased employment will contribute to the generation of higher National Income.
3. Increases possibility for Dispersal of Economic Power-
Economic power is the natural outcome of Industrial and business activity. Industrial development normally leads to concentration of economic power in few hands, which leads to Monopoly. The conditions of monopoly in the country shall lead to a number of social and economic evils.
Hence the encouragement given by the Government to new Entrepreneurs to set up a large number of enterprises helps in weakening the harmful effects of monopoly. When the concentration of Economic Power in few hands has been removed and wealth shared by a large number of Entrepreneurs, socialism can be promoted, and the Nation shall become economically wealthy.
4. Leads to Balanced Regional Growth-
The growth of Industry and Business leads to the development of a number of other areas such as transportation, health, education, insurance, warehousing etc. hence a rapid development of Entrepreneurship ensures a balanced regional development.
If the new Entrepreneurs grow at a faster rate in view of increasing completion, the surrounding areas are developed due to the spreading of entrepreneurial activities to other areas. Therefore, setting up enterprises in smaller towns which are away from big cities/towns helps in the development of backward regions also.
Also Read: Indian Economy On The Eve Of Independence (1947)
5. Provides better Standard of Living-
In any Economy, the people desire to get the goods and services in the required quantities at required places to satisfy their needs and wants.
The Entrepreneurial activities lead to the establishment of a micro, small, medium, and large scale enterprises in all regions of the country. The scarcity of essential commodities is removed with the initiation of entrepreneurial activities.
All the Entrepreneurs leads to improvement in the standard of living of the people. Hence providing goods and services in required quantities at a lower price, improves the purchasing power and standard of living of the people.
6. Role of Entrepreneurship in Economic Development is that it helps in the production of Qualitative Goods-
Entrepreneurial activities contribute much to the development of an economy. The increased Entrepreneurial undertakings ensure newer and qualitative products to the consumers, the Entrepreneurs in order to face the competition of the market and to satisfy the desires of consumers.
They concentrate on improved methods of production, quality of the product, reasonableness in price, effective distribution, etc. hence the quality of the product and services provided by the Entrepreneurs ensures the good health of the consumer.
7. Increasing Income Levels-
The increased Entrepreneurial activities lead to higher income levels and purchasing power of the people. The Entrepreneur’s Industrial activities provide an increase in direct or indirect income levels to many people, the income levels of the people are increased owing to the availability of goods at lower prices, or generation of direct or indirect employment, promotion of comforts, the establishment of infrastructural facilities etc.
8. Helps in Exports-
The increased Entrepreneurial activities not only provide the required goods and services to the people, but it is also for expanding the surplus production of the Nation to other countries. It means that the country shall become self-sufficient and can earn foreign exchange also with exporting of surplus goods and services.
9. Role of Entrepreneurship in Economic Development is that it generates Capital-
Increased Entrepreneurial activities help in generating scare capital. The Entrepreneur acts as a middleman between investors and enterprise and raises capital from various sources.
The capital raised is used for setting up a new business for creating goods and services to satisfy the consumer needs and wants, the high growth rate of capital formation indicates the Economic development of a Country.
10. It enables effective Utilisation of Natural Resources-
A Country’s Economic development always depends on the Utilisation of its Natural Resources. Availability of natural resources differs from one region to other regions. When available resources such as climate, soil, rainfall, mineral mines, sources of power and gas etc. are effectively used, the economy is assured of rapid growth and development of a country.
11. It helps in the creation of Markets-
Entrepreneurial activities lead to increased production of goods and services. This automatically leads to the creation of new markets and new customers for the new enterprise. Thus, a new enterprise creates a new market for the goods and services and capture a market share in the business.
12. It enhances Per Capita income-
The per capita income of a country is equal to national income divided by its population. The availability of goods and services produced by Entrepreneurs leads to an increase in national income which in turn increases per capita income of the people. The increased per capita income reflects the Economic Growth and Industrialization of an economy.
13. It makes the country Self-reliant-
The Entrepreneurial activities of Entrepreneurs enable the country to be self-reliant. It reduces the dependence on imports and increases in exports.
Therefore, our country becomes self-reliant by producing goods and services required by society. The reduced dependence on foreign countries and their produce indicates a strong balance of payments for our country.
14. Is that it leads to Innovations-
Entrepreneurial activities lead to employing resources on new ideas and innovations. The Entrepreneurs locate new ideas and put them into effect in the process of Economic Development. The Entrepreneur is an innovator of new ideas of products and services. They are capable of satisfying the dynamic needs of Society, like generating Employment Opportunities.
Conclusion
All these above-mentioned points are the main reason as to why Entrepreneurship is important for Economic Development. Entrepreneurship is important for Economic Development.