Entrepreneurship and the economy

1. Lecture 4
Entrepreneurship and the Economy

2. Entrepreneurship and its relation to the economy.
National
According to Indrawati (2016), micro, small, medium enterprises are very important to the economy in Indonesia. SMEs involved in 99
percent of the entire amount of companies that operates in Indonesia which has created about 107.6 million of jobs in the largest
economy of Southeast Asia. Moreover, these companies have involved in Indonesia’s gross domestic product (GDP) for about 60.6
percent. This shows how important SMEs are to Indonesia.

3. International
SMEs plays a very important role in the world’s economy by providing employment as they are the ones who create formal jobs in the
developing market. Although SMEs plays a major role in the economy, the results of the observation shows that 50% of the SMEs do
not have the connection to finance and capital investment. The categorization of SMEs around the world is different as they normally
classified by the number of workers, sales turnover and capital. For example, in Canada, company with employees less than 500 will be
classifies as SMEs. In Germany, 350 employees, in New Zealand, 19 employees and lastly in European Union, the limit is 250
employees for medium sized business and 50 employees for small sized business. Moreover, the economic growth in Japan, Taiwan,
Korea developed according to the activities of SMEs. SMEs plays a important role in the fast development and industrialization of
China as SMEs take 99% of the total business

4. Local
According to Koran Jakarta (2017) quoted Pardosi (2017), SMEs monopolized 93.46 percent and the other 6.54 percent is Large
Medium enterprises. Thoman (2017) stated that West Jakarta has the largest number of business which is 26.06 percent, East Jakarta
which is 21.59 percent and South Jakarta which is 20.05 percent. On the other hand, it is stated that processing industry is centered in
West Jakarta with the highest number of businesses which are 47.63 percent. For the mining industry, it is centered in South Jakarta
with the highest number which are 69.88 percent. According to Jakarta dalam Angka (2018), there are around 3.77% poor people in
DKI Jakarta. In addition, West Jakarta owned the lowest percentage of poor people which is 3.25%. This show a close relationship to
the high number of enterprise owned by West Jakarta to the lowest percentage in the area. The data shows that 26.06% of enterprises are
located in West Jakarta (Thoman, 2017). This proven the important role of enterprise especially SMEs in contributing to the local
economy.

5. Regional : East Java
According to Istifadah (2015), the total of MSMEs in East Java reached 99.85 percent where most entrepreneurs work in the informal
sector which has lack of funds, production techniques, and marketing. MSMEs in East Java consists of 85.09% micro-sized business,
14.19% small sized business, and 0.57% medium sized business, and 0.15% large sized business. The development of MSMEs is
important to raise the economic growth in East Java as most of entrepreneurs in East Java works in micro, small and medium businesses.
In the year 2013, MSME in East Java increased by 2 million from 2012 where the business unit increased from 4,2 million to 6,8 million
. The economic growth of East Java in 2013 hit 6.55 percent higher than the national economic growth that only reached 5.78 percent.
This shows that the MSMEs in East Java works as the economic drivers that are capable of supporting and providing labor force.

6. References Academic
Istifadah, N. (2015). PERAN, PENYERAPAN TENAGA KERJA, SERTA INOVASI UMKM DALAM MEMBANGUN KEWIRAUSAHAAN
YANG BERKELANJUTAN DI JAWA TIMUR. [online] Research Gate. Available at:
https://www.researchgate.net/publication/289790631_PERAN_PENYERAPAN_TENAGA_KERJA_SERTA_INOVASI_UMKM_DA
LAM_MEMBANGUN_KEWIRAUSAHAAN_YANG_BERKELANJUTAN_DI_JAWA_TIMUR [Accessed 23 Nov. 2018].

7. Non Academic
Indrawati, S. (2016). Indonesian Economy: Micro, Small & Medium Sized Enterprises | Indonesia Investments. [online]
Indonesia-investments.com. Available at:
https://www.indonesia-investments.com/news/todays-headlines/indonesian-economy-micro-small-medium-sized-enterprises/item7068
[Accessed 23 Nov. 2018].
iQualifyUK (n.d.). The impact of SMEs in the global economy - iQualify UK. [online] iQualifyUK. Available at:
http://www.iqualifyuk.com/library/business-management-section/the-impact-of-smes-in-the-global-economy/ [Accessed 23 Nov. 2018].
Jakarta dalam Angka. (2018). [ebook] Available at:
https://jakarta.bps.go.id/publication/2018/08/16/67d90391b7996f51d1c625c4/provinsi-dki-jakarta-dalam-angka-2018.html
[Accessed 22 Nov. 2018].
Koran Jakarta. (2017). UKM Mendominasi Usaha di Ibu Kota. [online] Available at:
http://www.koran-jakarta.com/ukm-mendominasi-usaha-di-ibu-kota---/ [Accessed 22 Nov. 2018].