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p4 {margin: 0.0px 0.0px 8.0px 0.0px; font: 16.0px ‘Times New Roman’; -webkit-text-stroke: #000000} span.s1 {font-kerning: none} Student Number: 179044437Jabir Nizam Why has the idea that entrepreneurs are the drivers of economic growth been so attractive?IntroductionThe process of designing, setting up and running of a new venture is often regarded as entrepreneurship. An entrepreneur is the one who sets a business in order to make a profit.
Entrepreneurs are the key source of every economy as they start, drive and take responsibility and accountability for every action they take as a business. They have the most influential role in economic growth by raising the standard of living of the country. So I believe that they are the drivers of economic growth by taking risks of their self-collateral without even considering the opportunity cost.
How do entrepreneurs drive the economy?Entrepreneurs drive the economy by establishing their own business which leads to investment in resources and therefore attracts capital from the public. Which has many benefits for both parties, the entrepreneurs themselves get compensated through profits and also make profits for the public which increases spending for the public. Entrepreneurs have the skill to make public, banks, and governments to invest in their firms which in turn benefits them by dividends to the public and interest to the banks. By pooling wealth the results are in the creation of wealth and also sharing the wealth throughout the shareholders and this initiative is a factor to economic growth. This, in turn, multiplies the money in the economy and rotation of money in the economy as there will be more entrepreneurs who see the profits and enter the economy which leads to more competition and more creation of wealth and distribution too, in other words, it turns into a vicious cycle.
Secondly, there will be a direct effect on the unemployment rate as entrepreneurs are the key to employment. The simple definition of entrepreneurs is that there is one less seeker of jobs and a multiplier of jobs. Not just directly but indirectly as well as the entrepreneurs are going to buy materials for his good from other and provide services to other businesses which will create jobs in other industries as well. For example, a computer manufacturer would create jobs in that industry and also other industry too by buying raw materials for the computer such as screws and screen.
This then would create jobs in those factories too. Other than that, this will also create opportunities in service industries for recruiting jobs and more. This is why entrepreneurs are the key to economic growth. Some employment opportunities will also have great benefits to the economy as one spends more, there will be a cyclical benefit as the seller would get the money and make more too which gives a multiplier effect to the economy.
Other than that, when it comes to the economy the growth in an economy is measured in GDP or output per worker. So when an entrepreneur comes into play he will make sure that the worker is productive enough to stay in the company so he will make sure that workers are maximum utilised so this will increase GDP as a whole. Entrepreneurs make sure to increase productivity by structuring the labour force properly or automates the business process, so he would save costs in order become more competitive in the market. So this, in turn, will increase GDP in the economy as out per worker will raise.
On the other hand, entrepreneur saves money too by that he may reinvest in the product and increase productivity even more and also spend more and increase economic growth.The third reason why entrepreneurship is the most attractive as economic growth is because it increases the standard of living among the people. This can be linked to how entrepreneurs create job and develop economy but more than that. Its also by creating and adopting a new innovation that leads to improvement in the quality of life for their customers, shareholders and workers.
Customers as they can benefit from low-cost production, workers as they can get wages and shareholder as they get dividends. Other than that, entrepreneurs are the main contributor of tax revenue which is a direct benefit to the economy. They contribute a lot of money to the government which can then be used to development of infrastructure and growth in the economy by other means like lending money to public or more entrepreneurs and governments based profit organisations.
There are also indirect benefits to the economy as workers also pay tax so when entrepreneurs pay workers some of it also goes as tax to government which then also benefits the economy as a whole.Entrepreneurs also contribute to charitable contributions like how bill gates donated 30 Billion Dollars on 2014. On other cases, companies tend to always focus on corporate school responsibility and focus on giving back to the community. As an example, a financial company might start a program that provides loans to family with low incomes.
Other entrepreneurs, get in the play by themselves and also work at charitable institutions for a good cause. Other than that, entrepreneurs are very skilled and experienced in businesses so some provide invaluable business ideas to charitable institutions. Entrepreneurs also develop the economy through change. They have created new innovations such as Laptops and smartphones which have changed everything in the world it has improved the efficiency of the companies and a lot more. Statistics shows when there is a new innovation there is rapid economics growth and strong economic growth.
When a machine is being created there will be more output produced with the same mouth of worker which intern increase the output per worker, so it can directly be linked to GDP. This also sets them apart from other competitors as they may not have the same passion to find new solutions to problems. Entrepreneurs not only succeed from their innovation but change people lives, making them easier and also inserting in a lot of value to peoples lives. To conclude, these are major reasons why entrepreneurs are the drivers of economic growth and thats why they are the reason for economic growth. They tend to have the ability to combine all factors of production and risk their everything and change the economy through many factors. By giving jobs to many people, increase the standard of living overall, improve infrastructure, change peoples lives, major contributor to tax revenue and contribute to charitable institutions/ corporate social responsibility.
