Entrepreneurs work for themselves to make profits. They also play a prominent role in the upliftment of the economy. The government keeps coming up with new ideas and policies to develop entrepreneurship in India like the Mudra Yojna. Have you ever wondered what an entrepreneur provides to the nation that makes the government so keen on promoting this field? Here we explain the role of entrepreneurs in the economy. The entrepreneurs have many vital parts to perform in the economy of the country. However, before that, it is critical to know what is meant by an economy.
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There are many functions of entrepreneurs in the economy. The economy can be seen as an area where production, trade, distribution, and consumption of goods take place. The economy follows the simple rule of supply and demand. If the consumers demand something, then that is supplied by the producers in the country’s economy. When there is a consumer need recognized by society, an entrepreneur comes into the picture to satisfy these needs. He makes sure to do his work efficiently, which in turn will convert to profits for him.
GDP is the monetary value of the final services and goods that are produced by an economy in a particular time frame, which is usually a year. Entrepreneurs in the economy provide these services and goods. In a country like India, that is currently developing at a fast pace; the entrepreneurs have a pivotal role to play to produce the right amount of services and goods to satisfy the peoples' demands. In a situation where there were no entrepreneurs, the country would only be dependent on the imports and its multinational companies, which in turn would either affect or even collapse the GDP. That's the reason why entrepreneurs are necessary to generate GDP for the economy.
There are many Indian industries like the handloom industry that produces goods not just to meet the local demands but also to export them. These goods are sold to foreign countries, and this, in turn, lets the manufacturing country earn foreign exchange. This again adds to the economic growth of any country.
When someone starts any new venture, then there is a need for various resources. This also includes humans to work for them. There are people recruited to perform different kinds of functions in any organization. So entrepreneurs play a crucial role in the economy of the nation, which is to generate employment.
When there is more employment created, this also leads to more taxes for the government. Tax revenues are increased, which can be used by the government for the improvement and the development of the country and to improve the standard of living of its people.
India is a highly labour-intensive country. This is because the country has a large population. The entrepreneurs are capable of generating employment which in turn helps the government as it brings down the unemployment number and thus poverty of the nation. When there is more income, people too can afford better things.
Entrepreneurs have introduced many new technologies to the country’s economy. These technological advancements uplift the country and are another reason why the government helps entrepreneurs.
The industries in the economy are interconnected. Some industries use the products of other industries. This lets one generate more services and goods as well as more revenue for the economy.
Like for example, flour is the finished product for a company that has its flour mill and manufactures flour. However, the same flour now works as a raw material to produce biscuits. One product or idea of an entrepreneur's business develops another product or services, and this forms a chain.
The entrepreneurs pay direct and corporate taxes to the state government. Without this tax, the state government cannot function. The entrepreneurs help to generate additional tax for the country.
A lot of entrepreneurship startups are funded by companies in foreign countries. This lets the economy bring in more foreign investments. The RBI helps these startups as it relaxes the policies that it puts on the FDI.
All these points clearly explain the role of entrepreneurs in economic development. They are a massive asset to the country. The functioning of the economy has a significant role to play, depending on the existence of entrepreneurship.
There are many functions an entrepreneur fulfils in the economy. Entrepreneurship is crucial to any society because it does not just generate profits for the entrepreneurs but improves the living standards of the people of the country as it creates employment. Entrepreneurship creates wealth for the country and also gives rise to many related businesses. The entrepreneurs drive change because of innovation as they develop new products and bring in new technologies that help the economy to grow as a whole.
Q.1 How Does an Entrepreneur Contribute to the Country?
The entrepreneurs contribute to the GDP. Entrepreneurs are concerned with the production of services and goods. The entrepreneurs thus affect employment. They generate revenue and also contribute to foreign exchange. The entrepreneurs generate employment and contribute to generating tax for the nation. They eradicate poverty and also bring in new technological advancements in the country. The entrepreneurs help to bring in FDI. They thus have two major functions in the economy of a country. They take the risk and develop new services and products, and they promote these products and services in the marketplace.
Q.2 How Do Entrepreneurs Help Other Industries in the Economy?
Various industries in the economy are interconnected. So when one product is a finished good for a particular industry, it may become the raw material for another industry. Like for example, a company may make steel as its final product using raw material. This steel then works as a raw material to make cars. The large scale industries like cars and buildings make use of many small entrepreneurship companies. It is this interlinking between various small entrepreneurship businesses that helps to generate the final product.