“Whatever you can do or dream you can, begin it. Boldness has genius, power, and magic in it.” The words are attributed to German author and natural philosopher Johann Wolfgang von Goethe, but they seem to name the essence of the entrepreneurial spirit.
An entrepreneur is a person who perceives a need then brings together manpower, material and capital required to meet that need. In other words an entrepreneur is an individual or team that identifies the opportunity, gathers the resource, creates and ultimately responsible for the performance of the organization.
Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector.
Role of entrepreneur in economic development are given below:
1. Capital Formation
Entrepreneurs promote capital formation by mobilizing the idle savings of public. Entrepreneurs by placing profitable business proposition attract investment to ensure private participation in the industrialization process.
The otherwise idle savings are channelized for investment in business ventures which in turn provides return. Again the savings are invested giving a multiplier effect to the process of capital formation.
They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.
2. Balanced Regional Development
The entrepreneurs always look for opportunities in the environment. They capitalize on the opportunities of governmental concessions, subsidies and facilities to set up their enterprises in undeveloped areas. This helps to remove regional disparities through setting up of industries in less developed and backward areas.
The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to more development of backward regions and thereby promotes balanced regional development.
3. Generate Employment
Growing unemployment particularly educated unemployment is the acute problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.
If hundred people become entrepreneurs, they not only create jobs for themselves but also will provide jobs for hundred more people. As the enterprises grow these create more direct or indirect jobs in the market.
In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.
4. Improve Standard of Living
Entrepreneurial initiative through employment generation leads to increase in income and purchasing power which is spent on consumption expenditure. Increased demand for goods and services boost up industrial activity.
Large scale production will result in economies of scale and low cost of production. Modern concept of marketing involves creating a demand and then filling it.
Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.
5. Increase in Per Capita Income
Entrepreneurs convert the latent and idle resources like land, labor and capital into goods and services resulting in increase in the national income and wealth of a nation.
Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities,, encourage effective resource mobilization of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country.
The increase in national income is the indication of increase in net national product and per capita income of the country.
6. Economic Independence
Entrepreneurship is importance for economic self-reliance. Businessman export and import goods and services on a large scale and earn the scarce foreign exchange for the country. Such import substitution and export promotion help to ensure economic independence of the country.
7. Creating Innovation
An entrepreneur is a person who always looks for changes. Apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation.
According to Meir and Baldwin, development does not occur spontaneously as a natural consequence when economic conditions in some sense are right. A catalyst is needed which results in entrepreneurial activity to a considerable extent. The diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs.