Question

Discuss three ways by which an entrepreneur promotes economic growth.

Explain five ways in which entrepreneurs can promote the economic development of a country.

Explain the role of an entrepreneur in the economic development of the country.

Answer 1

Entrepreneurs contribute to economic growth in the following ways:

• Innovative power towards industrialisation: When entrepreneurs introduce cost-reducing or demand-creating innovations in various industries, industrial production becomes profitable. The country will become self-sufficient in the production of various types of industrial goods of high quality to cater to the changing needs of both domestic and foreign markets.
• Generation of higher employment: Different types of innovation result in higher profits for entrepreneurs. They use the earned income for productive purposes or in new ventures. This leads to an increase in investment, which generates employment opportunities in an economy.
• Ability to predict the future market and business conditions: Entrepreneurs make a complete analysis of market conditions at regular intervals. This enables a firm to take precautionary actions to overcome uncertain business conditions, such as inflationary and deflationary conditions. So, the economy will be balanced at times of unfavourable business conditions because of entrepreneurs.

Answer 2

1. Entrepreneurs mobilize the idle savings of the public through the issue of shares and debentures. Investment of these savings in industry results in capital formation.
2. They generate employment opportunities in the country and thus help to reduce the unemployment problem in the country.
3. When entrepreneurs set up industries in backward areas of countries, they help to remove regional disparities in economic development.
4. Entrepreneurs produce a variety of consumer goods which help improve the standards of living of the masses.
5. Industrialists, when they produce goods and services which used to be imported from abroad, help reduce dependence on foreign countries.