Economic growth can be substantiated using various ways. Of the myriads of ways by which economic growth is confidently backed, entrepreneurship can play a significant role in increasing fiscal growth and prosperity via increasing Gross National Product (GNP) and Per capita income. It is also known that Gross National Product measures the total economic output of a country, whereas Per capita income (PCI) calculates the average income per person. The increase in GNP can lead to a rise in PCI, of course.
Taking this fact into account, The Ethiopian Herald consulted Melesse Woldie, an economist graduated from Addis Ababa University, to solicit viable information on the side of professional point of view.
He said, “Entrepreneurship plays a key role in shaping the economy and creating a more dynamic and diverse business opportunities. Entrepreneurship also promotes innovation and competition, leading to new and improved products and services that contribute a lot to economic growth and development.”
As to Melese, entrepreneurship drives the growth and diversification of the economy and contributes to the creation of wealth. Entrepreneurship is really of significantly useful in driving economic growth and creating new job, encouraging innovation by bringing new ideas, products, and services to the market, contributing to social change by developing products or services that reduce people’s dependence on outdated technologies.
According to Melesse, the role of entrepreneurship in economic development is substantial. Yes, he said, not only do entrepreneurs just build businesses and grow their personal wealth but they also impact the economy by creating new jobs and opportunities, driving innovation, and developing new markets, products, and services.
Besides, it is important to address social and economic problems by creating solutions that meet the needs of society and enable competition which improves business efficiency and lowers prices for consumers.
As to him, the role of entrepreneurship in economic development has some salient takeaways. In the first place, it targets at raising standard of living. This entails a significant role of entrepreneurship in economic development is that it can greatly enhance the standard of living for individuals and communities by setting up industries and creating wealth and new positions. Entrepreneurship not only provides large-scale employment and ways to generate income, it also has the potential to improve the quality of individual life by developing products and services that are affordable, safe to use, and add value to their lives. Entrepreneurship also introduces new products and services that remove the scarcity of essential commodities.
Secondly, it helps declare economic Independence. Entrepreneurship can be a path to economic independence for both the country and the entrepreneur. It reduces the nation’s dependence on imported goods and services and promotes self-reliance. The manufactured goods and services can also be exported to foreign markets, leading to expansion, self-reliance, currency inflow, and economic independence. Similarly, entrepreneurs get complete control over their financial future. Through their hard work and innovation, they generate income and create wealth, allowing them to achieve economic independence and financial security.
Thirdly, it benefits new firms and businesses. Entrepreneurs identify market needs and develop solutions through their products and services to begin their business venture. By starting new firms and businesses, entrepreneurs play a key role in shaping the economy and creating a more dynamic and diverse business landscape. Entrepreneurship also promotes innovation and competition, leading to new and improved products and services that contribute to economic growth and development.
Fourth, it fosters creation of jobs. Entrepreneurship is a pivotal driver of job creation. Running the operations of new businesses and meeting the requirements of customers’ results in new work opportunities. Entrepreneurship also drives innovation and competition that encourages other entrepreneurs and investments, creating new jobs in a wide range of industries, from manufacturing and construction to service and technology sectors.
Next, it facilitates community development. Entrepreneurship promotes economic growth, provides access to goods and services, and improves the overall standard of living. Many entrepreneurs also make a positive impact on their communities and improve their well-being by catering to underserved areas and developing environment-friendly products. Their work can help build stronger, more vibrant communities and promote social and economic development.
Then, it helps promote optimal use of Resources. Entrepreneurship can help identify market opportunities and allocate resources in the most effective way possible. Entrepreneurs also play a key role in developing innovative products and services that meet the needs of customers while optimizing the use of available resources.
According to Melese, entrepreneurs stimulate employment growth by generating new jobs when they enter the market. Yes, there is a direct employment effect from new businesses that arises from the new jobs being created.
Responding to the question posed to him whether self-employment and entrepreneurship are interchangeably used, he said self-employment is not synonymous with entrepreneurship. The level of entrepreneurial activity offers information about the dynamics of an economy, while the level of self-employment is not necessarily correlated with economic development. In fact, most economies with high levels of self-employment are less developed.
Entrepreneurship is considered crucial to a dynamic economy, and entrepreneurs create employment opportunities not only for themselves but for others as well. Entrepreneurial activities may influence a nations’ economic performance by bringing new products, methods, and production processes to the market and by boosting productivity and competition more broadly.
“Entrepreneurial opportunities will be greater in deregulated economies with freely operating markets and efficient licensing, because entrepreneurs can operate flexibly and their entrepreneurial activities can respond to changes in the market. It is also important that laws and regulations need to be enforced fairly and evenly,” he said.
Successful entrepreneurs are always looking for new and innovative ways to solve problems and meet the needs of consumers. Not only do they create jobs but also generate wealth for themselves and their employees. As their businesses grow and become more successful, they generate profits that can be reinvested to fuel further growth, Melesse added.
According to him, Economic development, on the other hand, refers to the process of improving the economic well-being and quality of life for a community or country. This can include increasing economic growth, reducing poverty and unemployment, and improving access to education, healthcare, and other basic needs. Economic development can be achieved through various means, such as attracting foreign investment, promoting industrialization, and improving infrastructure as well as boosting entrepreneurship.
True, he added the relationship between entrepreneurship and economic development is complex, but it is generally agreed that entrepreneurship plays a crucial role in driving economic growth and development. Entrepreneurship creates new businesses and jobs, generates innovation, and stimulates competition, all of which contribute to a more productive and efficient economy.
There are some ways he said that entrepreneurs can help drive this economic growth like social entrepreneurship, ethical practices, collaboration and partnerships, customer-eccentric approach as well as mentor-ship and support. Though starting a new business requires significant resources, including capital, expertise and time, many entrepreneurs face significant barriers to entry, such as a lack of funding, regulatory obstacles and market saturation.
“The main challenges include a lack of access to resources, education and training. Starting a business can be a challenging and rewarding journey, requiring a combination of hard work, dedication and a willingness to take calculated risks. However, the potential rewards can be immense, not just for the entrepreneurs themselves but for the entire community,” Melesse underlined.
In sum, entrepreneurship is the process of creating and running a new business venture in order to generate profits. It is a crucial factor in driving economic growth and development in both developed and developing countries. Entrepreneurial activity helps create new jobs, fosters innovation, and drives market competition, which ultimately benefits consumers.
The role of entrepreneurship in economic development cannot be overlooked. The relationship between entrepreneurship and economic development can provide valuable insights that can be used to create a supportive environment for entrepreneurs, promote economic growth, and improve the well-being of communities and nations.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD WEDNESDAY 3 APRIL 2024
