Summary Role of Entrepreneurship in Economic Development
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Course
Finance
Institution
Indian Institute Of Management
Entrepreneurship plays a crucial role in driving economic development in several ways. Firstly, it fosters innovation and creativity, leading to the development of new products, services, and technologies. This, in turn, creates job opportunities and drives economic growth.
Entrepreneurs also co...
The major role of entrepreneurship in economic development of an
economy is discussed as follows:
● Promotes Capital Formation: Entrepreneurial growth encourages
capital formation. It helps in mobilising idle savings of the public through
issue of securities which ultimately results in productive utilisation of
resources. Entrepreneurs raise capital by borrowing funds from external
sources like banks and financial institutions and convert the savings of
general public into capital.
● Employment Generation: Entrepreneurship generates employment
opportunities in the country by promoting small scale business. It not
only results in self employment but provides opportunity for others to get
the jobs according to their skills, knowledge and capabilities.
● Balanced Regional Development: Entrepreneurs help to remove
regional disparities through setting up of industries in less developed
and backward areas. In a way they get the advantage of government‟s
grants, subsidies and other benefits by promoting the industry in the
backward areas by providing large number of benefits like road
transport, education, health, entertainment etc to the public. Setting up
of industries to develop the backwards areas promotes balanced
regional growth.
● Wealth Creation: Entrepreneurship stimulates equitable redistribution
of wealth and income in the interest of the country to more people and
geographic areas thereby giving benefit to larger sections of the society.
Entrepreneurial activities also generate wealth in the economy and give
a multiplier effect.
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