Entrepreneurship plays a vital role in economy.

1. ROLE OF ENTERPRISES IN ECONOMY
Presented by:
Palka Mittal

2. CONTENTS
• Important Terms
• Factors affecting Economy
• Role of Enterprises

3. TERMS
• Economy: It is the organized system of human activity involved in the
production, consumption, exchange, and distribution of goods and
services.
• Economic Development: It is a process in which all efforts are made
to increase national income, national output, per capita income, per
capita output and standards of living of people by exploiting all
available resources of country.
continued…

4. • Entrepreneurship: It is a process to start a business by utilizing the
available resources.
• Entrepreneur: An Entrepreneur is a person with good ideas for
creating businesses.
• Enterprises: It is associated with entrepreneurial ventures and most
oftenly used as another word for business or company.

5. FACTORS AFFECTING ECONOMY OF A COUNTRY
Human
Resource
Capital
Investment
Natural
Resources
Technological
Development
Infrastructure
Political
Norms

6. ROLE OF ENTERPRISES IN ECONOMY
• Increase in National Income
National income consists of goods and services produced in the country.
These are for consumption within the country as well as to meet the
demand of exports.
• Capital Formation:
Entrepreneurs mobilize the idle savings of the public in industry that
results in productive utilization of national resources. Rate of capital
formation increases which is essential for rapid economic growth.
continued…

7. • Generation of Employment:
It generate employment both directly and indirectly. Directly, self-
employment as an entrepreneur offers the best way for independent and
honorable life. Indirectly, by setting up large and small scale business
units they offer jobs to millions.
• Balanced Regional Development:
It help to remove regional disparities in economic development. To avail
various concessions and subsidies offered by the central and state
governments, industries are mostly set up in backward areas.
continued…

8. • Improvement in Living Standards:
Entrepreneurs set up industries which remove scarcity of essential
commodities and introduce new products. Production of goods on mass
scale, in the small scale sector help to improve the life of a common man.
• Economic Independence:
Enterprises are essential for national self-reliance. They help to
manufacture indigenous substitutes of imported products thereby reducing
dependence on foreign countries. They also export goods and services on a
large scale and thereby earn the scarce foreign exchange for the country.
continued…

9. • Backward and Forward Linkages:
An entrepreneur initiates change which has a chain reaction. Setting up
of an enterprise has several backward and forward linkages. For
example- the establishment of a steel plant generates several ancillary
units and expands the demand for iron ore, coal, etc. These are
backward linkages. By increasing the supply of steel, the plant
facilitates the growth of machine building, tube making, utensil
manufacturing and such other units.
continued…

10. • Improvement in Per Capita Income:
Entrepreneurs locate and exploit opportunities. They convert the latent
and idle resources like land, labor and capital into national income and
wealth in the form of goods and services. They help to increase net
national product and per capita income in the country, which are
important yardsticks for measuring economic growth.