6th Mar, 2020

How Important Are Entrepreneurs To The Economy?

Entrepreneurs are often considered to be cultivating, empowering, and remunerating national assets to the greatest extent possible. Good businessmen are capable of changing the way we live and work. If successful, their inventions will raise living standards, and they also create employment and contribute to a growing economy in addition to generating wealth through entrepreneurial ventures. This article reveals why entrepreneurship is important to the economy;

Entrepreneurship fuels economic growth

New products and services produced by entrepreneurs may have a cascading effect where it stimulates related industries or sectors that need to support the new venture and promote economic growth. For instance, during the 1990s, a few information technology companies developed the IT industry in India. The industry rapidly expanded, and it helped many other industries. Businesses flourished in related industries— such as call center operations, network management companies, and equipment suppliers.

Institutes of education and training nurtured a new class of IT workers who had been offered better, highly paid jobs. Organizations for infrastructure development and even property companies capitalized on this increase as workers relocated to cities where jobs were growing. Likewise, in underdeveloped countries, future development projects need comprehensive logistics support, capital investment, and a skilled work force. Entrepreneurship helps a significant part of the economy from the highly qualified programmer to the construction worker.

Entrepreneurship helps build new wealth

Established companies can remain confined to existing markets, reaching the glass ceiling as regards revenue. New and improved entrepreneurial goods, services, or technology allow for the development of new markets and the creation of new wealth. Entrepreneurship adds on to new wealth.

Increased employment and higher earnings, in turn, lead to better national income by higher tax revenues and higher government spending. The government can use this money to invest in other industries, which are suffering, and human capital. Although it may make some existing players obsolete, by redirecting surplus resources to retrain staff, the government may soften the blow.

Entrepreneurship breaks away from tradition

Entrepreneurs break away from tradition by providing new goods and services, and raising dependency on outdated systems and technologies. It leads to enhanced quality of life, better morals, and greater economic independence. Smartphones and apps have revolutionized work and play around the globe to offer a more contemporary example. Smartphones are not exclusive to rich people or nations. As the demand for smartphones continues to grow, technological creativity can have a profound, long-lasting effect on the world. Furthermore, technology globalization ensures entrepreneurs in less developed countries have access to the same resources as their counterparts in richer countries. There is also the benefit of lower living costs so a young entrepreneur from an underdeveloped country can compete with an existing multi-million-dollar company from a developed country.

Development of community

Entrepreneurs frequently recruit other like-minded individuals in their businesses. Entrepreneurs also participate in community projects, and provide local charities with financial support. It enables additional development beyond their own projects. Many successful entrepreneurs, including Bill Gates, used their money to finance good causes, from education to public health.

The Takeaway

It is necessary for policymakers and business owners to understand the relationship between entrepreneurship and economic development. Knowing the benefits and disadvantages of entrepreneurship allows for a balanced approach to foster entrepreneurship, which can have a significant economic and societal effect.