How Entrepreneurship Benefits an Economy
Economic development means a process of upward change whereby the real per capita income of a country increases over some time. Economic growth has always been a serious issue and in the last 6 months, it has become a worldwide problem. There is a sudden decline in the economic growth of every country due to this pandemic.
Entrepreneurs serve as catalysts in the process of industrialization and economic growth. Entrepreneurship has historically spurred minorities, women, and immigrants to create better lives for themselves and their families. Currently, minorities own 15 percent of all U.S. businesses, accounting for $591 billion in revenue. Women are starting businesses at one-and-a-half times the national average and currently own 40 percent of all businesses, producing nearly $1.3 trillion in revenue.
Entrepreneurship plays an influential role in economic growth, the standard of living in the country, and various other things.
Impact of Entrepreneurship on Economy and Society
To know the role of entrepreneurship on economy and society, click here:
Why entrepreneurship is important to the economy:
1. Spurs economic growth
When entrepreneurs build businesses, it affects every part of the economy. Unemployed people get jobs through it directly or indirectly. New services and products developed by entrepreneurs increase the exchange of money in the country and abroad as well which spurs economic growth.
2. Adds national income
As new businesses or enterprises boom, it creates opportunities for people. A large number of people get employed through it. An increase in employment adds to national income in the form of tax revenue and higher government spendings. This amount can be used by the government for the betterment of other struggling sectors.
3. Generates employment opportunities
Business enterprises are one of the biggest sources of jobs in a nation. Entrepreneurship firms not only empower an individual but also creates opportunities for many people. A startup requires various people with different skill sets to run smoothly creating job opportunities for several people in various fields.
4. Innovation
Entrepreneurship is like an incubator of innovation. In this competitive world innovation is one thing that will separate you from the rest. To create an outstanding product, build a stronger network, reach out to consumers quickly, you need to innovate. To fulfill the demands of the people and to cope up with the market competition, entrepreneurs come up with creative ideas and services. And this brainstorming to fill the consumer needs makes them innovative thinkers.
5. Impact on community life
The establishment of an enterprise helps promote numerous retail facilities, a higher level of homeownership, fewer slums, better sanitation standards, and higher expenditure on education, recreation, and religious activities.
They invest in community projects and provide financial support to local charities. This enables further development beyond their ventures.
Thus, entrepreneurship leads to more stability and a higher quality of community life.
6. Better standard of living
The standard of living is a concept built on an increase in the amount of consumption of a variety of goods and services over a particular period by a household.
And it depends on the availability of diversified products in the market. Along with that by creating job opportunities increases the income of the people resulting in the enhancement of their standard of living.
Ownership of luxury cars, computers, mobile phones, the rapid growth of shopping malls, etc. are some factors that indicate the rising living standards of people, and all this is due to the efforts of entrepreneurs.
Tech Business Ideas for Startup Entrepreneurs?
There are numerous thoughts for technology-related businesses out there. To know more about it, click here:
Ways in which entrepreneurship can combat unemployment:
Entrepreneurship and unemployment are interrelated. Unemployment is defined as a situation where someone of working age is not able to get a job but would like to be in full-time employment. Unemployment occurs when a person who is actively searching for employment is unable to find work.
Entrepreneurship or business ownership is a significant source of employment and economic development. When a person starts an enterprise he/she not only gets self-employed but also creates opportunities for thousands of people. When battling unemployment, entrepreneurship is a solution, entrepreneurs open doors to new ventures, new business, new alliances, etc.
According to Eva Majurin, an enterprise development specialist of the International Labour Organisation or ILO, "entrepreneurship is one of the biggest creators of jobs in the world, and by far, two-thirds of new jobs come from micro, small and medium enterprises."
The United Nations World Employment and Social Outlook 2017 report acknowledged that India was responsible for maximum job creation in 2016 in the Asia and Pacific region. According to DPPIT Secretary, 1,87,004 jobs have been reported by 16,105 Department for Promotion of Industry and Internal Trade which include more than 11 direct jobs per startup with each direct job leading to 3x indirect jobs. The total jobs created by these startups are estimated at more than 5,60,000.
In 2015, 414,000 startups created 2.5 million new jobs, according to a 2017 U.S. Census report. The Bureau of Labor Statistics shows that 415,226 startups were created in 2017, leading to a gain of 1.7 million jobs. And venture capitalists invested a record $130.9 billion in new companies in 2018.
Entrepreneurship reduces unemployment in the following ways:
- The decline in the economic growth and fall of the economy into recession is usually associated with a higher level of the unemployment rate and a decrease in salaries. And a new enterprise needs numerous people to perform different roles according to their skills hence this leads to providing jobs to them directly as well as indirectly.
- When an enterprise is running successfully, it motivates the entrepreneur to set up a new branch at some other place leading to more new job opportunities.
- Expanding small business opportunities will stimulate competition, which in turn can result in the setting up of new businesses with new products and services and/or lower prices for consumers. And Small businesses tend to hire people in their neighborhood result in the elimination of unemployment
- An entrepreneur's living standard motivates youths to start their own business instead of working for someone else and it results in the creation of more job opportunities.
- For those in poverty, for whom a good-paying traditional job is not available or feasible, starting a business may be their best option. According to the National Center for Policy Analysis, “higher average rates of entrepreneurship in a state corresponding to bigger declines in poverty.
- When an entrepreneur is making a product, he/she requires raw materials from other companies thus creating job opportunities in those companies. New skills are also needed for new products and this opens up the job market for scarce skills.
Read more ways by which business can help tackle unemployment by clicking on the below link:
8 ways business can help tackle unemployment
How can a business make a difference in the employment and skills crisis? Read More.
How Entrepreneurship Can Solve the Problem of Unemployment
Lack of employment opportunities, unfavorable working terms and conditions, exploitation, non-professional skills, less technical, and various other clauses contribute to unemployment. Read More.
Contributor: Jyotsana Rani
Jyotsana is very keen to express her views on new topics and wants readers to remember her through her writing. She is passionate about reading and believes that words wield the power of changing the scenario and she uses them to encourage people to the best of her knowledge.
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