Role of Entrepreneurship in Economic Development

Entrepreneurship:
Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk taking appropriate to the opportunity and through the communicative and management skills to mobilize human financial and material resources necessary to bring a project to fruition.
According to A. H. Cole, "Entrepreneurship is activity of an individual, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services."
According to Schumpeter, "Entrepreneurship is based on purposeful and systemic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions".

Need For Entrepreneurship Development:
Economic development essentially means a process of upward change whereby the real per capita income of a country increases over a period of time. Entrepreneurship has an important role to play in the development of a country. It is one of the most important inputs in economic development.

The economic history of the presently advanced countries like USA, Russia and Japan supports the fact that economic development is the outcome for which entrepreneurship is an inevitable cause. The crucial and significant role played by the entrepreneurs in the economic development of advanced countries has made the people of developing and under developed countries conscious of the importance of entrepreneurship for economic development.
It is now a widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of the countries availability of resources.
The role of entrepreneurs is not identical in the various economies. Especially depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favorable opportunity conditions than in Economies with relatively less favorable opportunity condition.

Entrepreneurship and Economic Development:

Entrepreneurship helps in the process of economic development in the following ways:
Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilizing the idle savings of 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 wealth, which is very essential for the industrial and economic development of the country.
Employment Generation:
Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best Way to fight the evil of unemployment.
National Income:
National Income consists of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurs are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income.

Balanced Regional Development:
The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development, when the new entrepreneurs grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.
Dispersal Economic Power:
Industrial development normally may lease to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurs helps in dispersing the economic power amongst the population. Thus it helps in the harmful effects of monopoly.
Better Standards of Living:
Entrepreneurs play a vital role in achieving a higher rate of economic growth. Entrepreneurs are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements. When the price of the commodities decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people.

Creating Innovation:
An entrepreneur is a person who always looks for changes. Apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always tries to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic Development through innovation.
Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country
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 earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.
Backward-Forward Linkage:
Entrepreneurship helps in the process of economic development by creating backward and forward linkage, where an entrepreneur identify the best usable raw materials for his/her business as well as think the situation that what or which will be benefited by using the final products. That means it creates direct relationship between raw materials to ultimate use.
Mobilization of Capital:
Entrepreneurship encourages effective resource mobilization of capital and skill which might otherwise remain unutilized and idle. When resources will be mobilized it provides the effective use of the capital and resources, as a result the national economy will be developed.
Conclusion:
So, it is clear that entrepreneurship serves as a catalyst of economic development. The wide range of significant contributions that entrepreneurship makes to the economic development include Employment Generation, National Income, Balanced Regional Development, Dispersal Economic Power, Better Standards of Living, Creating Innovation, Backward-Forward Linkage and Mobilization of Capital, etc. The overall role of entrepreneurship in economic development of an economy is put as "an economy is the effect for which entrepreneurship is the cause".