One good measure of regional differences in economic development is the per capita income criteria. Since economic development is fundamentally a process, the rise in per capita income shouldn’t be interpreted as a fleeting or transient occurrence.
Naturally, the main criterion for assessing the level of development in a region is the rise in per capita income. Along with the main criterion, there are additional sub-criteria that need to be taken into account.
An essential component of growth is the way in which revenue is distributed among the community. Secondary goals like as employment, consumption, and diversification against economic concentration are also significant.
Role of Entrepreneurship in Economic Development
Economic growth should be viewed as a tool to achieve goals rather than as an objective in and of itself. The ultimate goals of economic development are to improve people’s access to better food, education, health care, and living conditions as well as their employment and leisure options.
As a result, an increase in real per capita income is a useful metric for assessing the level of development in an area since it makes it possible to achieve the targeted levels of living, health, education, and nutrition.
The entrepreneur is essential to the development of new businesses that stimulate the economy and revitalize the long-standing businesses that comprise the economic framework. The function of entrepreneurship in economic development is as follows:
- Capital Formation
- Improvement in Per Capita Income
- Improvement in Living Standards
- Economic Independence
- Backward and Forward Linkages
- Generation of Employment
- Harnessing Locally Available Resources and Entrepreneurship
- Balanced Regional Growth
- Reducing Unrest and Social Tension amongst Youth
- Innovations in Enterprises.
Capital Formation
Entrepreneurs seek out and seize chances. They create wealth and national income in the form of goods and services by converting talent and idle resources like land, labor, and capital. They contribute to the nation’s rising per capita income and net national product, which are crucial indicators of economic growth.
Improvement in Living Standards
Entrepreneurs create new product lines and sectors that eliminate shortages of necessities. The large production of commodities and the small-scale manufacturing of handicrafts, among other things, contribute to raising the average person’s standard of living. These provide products at reduced prices and boost consumer choice.
Economic Independence
The ability to be an entrepreneur is crucial for national independence. By producing domestic alternatives to formerly imported goods, industrialists can lessen reliance on other nations. Large-scale exporters of goods and services also earn the nation’s limited foreign exchange by doing this.
Such export promotion and import substitution aid in preserving the nation’s economic independence, which is crucial for maintaining political independence.
Backward and Forward Linkages
An entrepreneur starts a change that spreads throughout the community. An enterprise’s setup involves multiple backward and forward links. For instance, the construction of a steel plant increases the need for coal, iron ore, and other resources and creates a number of ancillary units. These connections are in reverse.
The factory supports the expansion of machine building, tube manufacturing, utensil manufacture, and other units by boosting the supply of steel. Entrepreneurs instill a feeling of purpose and generate excitement. They provide the impetus for an organization. In every economy, entrepreneurial conduct is essential to its long-term health. Entrepreneurship is a vital discipline for both new and established businesses.
Generation of Employment
Around 44 million people were unemployed at the end of the seventh five-year plan. Because of the emphasis on modernization, automation, and technical improvement during the 1980s, unemployment has risen above levels seen in 1985.
The 1990s saw changes in government structure that are pushing industry toward capital-intensive models. This trend favors the expansion of the unorganized sector while decreasing job prospects in the organized sector. Training in entrepreneurship can reduce unemployment by promoting self-employment.
Harnessing Locally Available Resources and Entrepreneurship
India is thought to possess an abundance of natural resources. Despite projected development for over 50 years, several states have not advanced economically. As examples of pioneering initiatives, a few large-scale enterprises founded in economically underdeveloped areas by entrepreneurs from outside the state may be helpful.
However, local entrepreneurship’s participation in these kinds of activities is ultimately what gives industrialization in underdeveloped places its true strength; more local enterprise will also lead to more making. Utilizing the many readily available local resources.
Balanced Regional Growth
Only with substantial funding, which must come from the public coffers or be provided by well-established industrial firms, can medium- and large-scale industries be launched.
Furthermore, encouraging these sectors of the economy accomplishes little to lessen wealth and income gaps. Conversely, a significant benefit of small businesses is their ability to be launched with minimal funding, little to no prior experience, and no entrepreneurial history.
Reducing Unrest and Social Tension amongst Youth
It is widely accepted that a large number of issues linked to social unrest and youth unrest stem from young people not working in productive jobs. An alternative to a pay job is the only practical choice in the current changing climate where we are dealing with the issue of a recession in wage work options.
The nation must encourage young people with latent entrepreneurial instincts to pursue careers as independent contractors rather than wage workers. A different route through entrepreneurship might assist the nation in reducing social unrest and youth social stress.
Innovations in Enterprises
For business enterprises to survive and perform better, they must be inventive. It is thought that smaller businesses require and are more capable of innovating than larger ones. The limitations imposed by significant investments in current technology are not applicable to smaller businesses.
They are therefore both forced and free to innovate. According to a study conducted by the National Science Foundation in the United States, small businesses generate four times as many inventions per research dollar as larger ones. The goal of entrepreneurship development initiatives is to quicken the growth rate of small businesses in India. It is anticipated that a greater number of small businesses will lead to more innovations and enable the Indian sector to compete on the global stage.