Chapter 3 Entrepreneurship and Economic Development

Role of Entrepreneurship in the 21st Century

Entrepreneurship continuously plays an increasingly important role in a country's economic

development.

According to research done by the United Nations University (UNU), countries in the West are becoming
more reliant on smaller firms for specialized knowledge-driven goods and services because of their
flexibility and creativity. For example, food consumption, apparels, and requirements for home
management are now being better served by small-scale entrepreneurs. Reliance on big business and
mass production have started to give way to the entrepreneurial economy in many specific areas.

In emerging countries, innovative entrepreneurship makes economic growth possible through new
resources, technology, markets, and environmentally-friendly production processes.

Donor countries have recognized that in developing countries, private sector development is more
practical and beneficial than large-scale assistance to governments. Many young people in these places
are motivated to work better at starting making small-scale enterprises grow. Youth entrepreneurs has
become a vital strategy among development organizations.

According to UNU, entrepreneurship will contribute to growth and employment creation in advanced,
emerging, and least developed economies alike. This expectation is supported by recent findings of
historians, economists, and management scientists. The role of entrepreneurship in economic
development has been the focus of a two-year United Nations University World Institute for
Development Economics Research (UNU-WIDER) project, which resulted in the recent book
Entrepreneurship and Economic Development.

The need for innovative, high-growth entrepreneurship is emphasized in the book, together with the
country's important role in supporting entrepreneurs in different ways to match the needs of the
enterprises at different stages of development.

The book also shows the need for entrepreneurial solutions to intricate global challenges such as climate
change, migration, and terrorism.

Two warnings must be sounded, however. The first is that the role of the state as regulator and overseer
is important more than ever to make sure that undesirable social outcomes including crime, speculation,
corruption, and financial crises are averted and prevented from taking root. During natural casters,
these crises may easily arise, so the state must be ready to help save businesses.
The second warning is that people's well-being might be neglected in everyone's struggles to raise social
and economic growth. The measurement of people's well-being is still the final goal and the touchstone
of a country's progress.

Entrepreneurs' satisfaction over what they are doing should be the outcome of development so that
being an entrepreneur is not forced upon people; rather, it is taken as a matter of choice.

The breakdown of family solidarity may cause the economy to decline in the long run. Thus,
entrepreneurship may push economic development upward if the state appropriately supports it.
Relationship and goodwill in the family and the community will matter just as much as physical and
material wealth.

The combination of production, profit, and savings of entrepreneurs will contribute to the nation's
overall economic development. This means an economy can produce more goods and services if the
savings of individuals and of investors are made available for the expansion of the nation's capacity to
produce more goods and services. These combined resources also promote employment, which will lead
to improvement in the standard of living of the population. when the volume of production increases,
the potential for her investment expands and this eventually increases the economy's capacity for
growth. The population is given a greater chance to select from the goods and services available for
them.

This can help improve the standard of living, provide more job opportunities, greater prosperity, and
economic growth.

While economic growth has to do with an increase in the production capacity of the economy (i.e., the
capability

more goods and services), economic developments signifies an increase in economic growth that results
in the improvement in people's quality of life, which includes improved access to education, housing,
and other basic infrastructure.

It is desirable that the entrepreneur sets aside savings from the business that can be reinvested into the
business. Small businesses also serve the requirements of larger businesses and can even participate in
international trade.

Role of Government in Entrepreneurship Development

The government should create an environment where entrepreneurship can grow. Access to finance
should be made easier so that most entrepreneurs are helped in raising funds in the early stages of their
business. Access to technological, legal, and socio-psychological support must be made available
through government's assistance and stimulation to help entrepreneurs that are just starting their
businesses.
Policies, laws, regulations, and procedures should be simplified to ease the way for new entrepreneurs
as they go through the administrative complexities of starting a business. Bureaucratic delay, otherwise
known as red tape, is one of the barriers to new business creation.

New businesses need support in their lifecycle phases, especially the start. Many new businesses fail
during their first three years. They therefore need an appropriate support system to help them in these
crucial years. Because of limited resources experience, new and small businesses suffer much from
complicated compliance procedures and stringent taxation requirements, unlike large corporations that
employ staff to handle these problems for them. Legal requirements for social curity and other benefits
for the self-employed must be easy to follow and comply with In the digital age, business opportunities
have become numerous and varied. Entrepreneurs must adopt new information and communication
technology to thrive. Web entrepreneurs in the country continuously create new digital services and
products that need the Internet as basic component. They will require support measures to strengthen
their start-up attempts. Nowadays, entrepreneurs no longer have a choice but to invest in digital
technologies and embrace the digital world. They have special needs of their own that the government
must respond to.

Demographic groups that are underrepresented in the entrepreneurial population are young people
(especially the undereducated), women, the disabled, members of the indigenous population, and the
unemployed. Government and other institutions must open paths to empower them economically and
socially and leverage their creative and innovative capacities.