Role of Entrepreneurship in Economic Development

ROLE OF
ENTREPRENEURSHIP
IN ECONOMIC
DEVELOPMENT
Employment opportunities
• Entrepreneurs employ labour for managing their business activities and

provides employment opportunities to a large number of people. They
remove unemployment problem.
Balanced Regional Development
• Government promotes decentralized development of industries as most of

the incentives are granted for establishing industries in backward and rural
areas. Thus, the entrepreneurs to avail the benefits establish industries in
backward and rural areas. They remove regional disparities and bring
balanced regional development. They also help to reduce the problems of
congestion, slums, sanitation and pollution in cities by providing employment
and income to people living in rural areas. They help in improving the
standard of living of the people residing in suburban and rural areas.
Mobilization Of Local Resources
• Entrepreneurs help to mobilize and utilize local resources like small savings
and talents of relatives and friends, which might otherwise remain idle and
unutilized. Thus they help in effective utilization of resources.
Optimization Of
Capital
• Entrepreneurs aim to get quick return on investment. They act as a
stabilizing force by providing high output capital ratio as well as high
employment capital ratio.
Promotion of Exports
• Entrepreneurs reduce the pressure on the country’s balance of payments by

exporting their goods they earn valuable foreign exchange through exports.
Consumer Demands
• Entrepreneurs produce a wide range of products required by consumers.

They meet the demand of the consumers without creating a shortage for
goods.
Social Advantage
• Entrepreneurs help in the development of the society by providing

employment to people and paves for independent living They encourage
democracy and self-governance. They are adept in distributing national
income in more efficient and equitable manner among the various
participants of the society.
Increase per capita income
• Entrepreneurs help to increase the per capita income of the country in

various ways and facilitate development of backward areas and weaker
sections of the society.
Capital formation
• A country can attain economic development only when there is more

amount of investment and production. Entrepreneurs help in channelizing
their savings and savings of the public to productive resources by
establishing enterprises. They promote capital formation by channelizing the
savings of public to productive resources.
Growth of capital
market
• Entrepreneurs raises money for running their business through shares and
debentures. Trading of shares and debentures by the public with the help of
financial services sector leads to capital market growth.
Growth of infrastructure
• The infrastructure development of any country determines the economic

development of a country, Entrepreneurs by establishing their enterprises in
rural and backward areas influence the government to develop the
infrastructure of those areas.
Development of
Trader
• Entrepreneurs play an important role in the promotion of domestic trade
and foreign trade. They avail assistance from various financial institutions in
the form of cash credit, trade credit, overdraft, short term loans, secured
loans and unsecured loans and lead to the development of the trade in the
country.
Economic Integration
• Entrepreneur reduces the concentration of power in a few hands by creating

employment opportunities and through equitable distribution of income.
Entrepreneurs promote economic integration in the country by adopting
certain economic policies and laws framed by the government. They help in
removing the disparity between the rich and the poor by adopting the rules
and regulation framed by the government for the effective functioning of
business in the country.
Inflow of Foreign Capital
• Entrepreneurs help to attract funds from individuals and institutions residing

in foreign countries for their businesses.

Role of Entrepreneurship in Economic Development

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ROLE OF

• Entrepreneurs employ labour for managing their business activities and

• Government promotes decentralized development of industries as most of

• Entrepreneurs reduce the pressure on the country’s balance of payments by

• Entrepreneurs produce a wide range of products required by consumers.

• Entrepreneurs help in the development of the society by providing

• Entrepreneurs help to increase the per capita income of the country in

• A country can attain economic development only when there is more

• The infrastructure development of any country determines the economic

• Entrepreneur reduces the concentration of power in a few hands by creating

• Entrepreneurs help to attract funds from individuals and institutions residing

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