The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important inputs in the economic development of a country. Entrepreneurship does not appear instinctively. Rather it is the result of an energetic procedure of interaction between the person and the environment.
The entrepreneur acts as a trigger head to give a spark to economic activities through his entrepreneurial decisions. He plays a pivotal role not only in the development of the industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy are discussed in a systematic and orderly manner as follows:
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilizing the idle savings of the public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealthy which is very essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up, of more and units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to more development of backward regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural, outcome of an industrial and business activity. Industrial development normally leads to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect on the economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities, encourage effective resource mobilization of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country is a sign of economic growth.
(7) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of the economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting the latest innovations in the production of a wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.
(8) Promotes Country’s Export Trade:
Entrepreneurs help in promoting a country’s export-trade, which is an important Ingredient of economic development. They produce goods and services in large scale for the purpose of earning a huge amount of foreign exchange from export in order to e ensure the import dues requirement. Hence important substitution and export promotion n sure economic independence and development.
(9) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximize profits by Innovation. When an enterprise is established in accordance with the changing technology, it induces its ward and forward linkages which stimulate the process (4, economic development in the country.
(10) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in a chain reaction or, an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so at many other units which require the output of this unit. This leads to overall development of an area due to increasing demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for an overall development of the area.