Entrepreneurship is cause but economic development is effect
By:Rajaram KshetriB. pharm, IOM“Entrepreneurship is CausebutEconomic development is Effect”
Contents:What is Entrepreneurship?Role of Entrepreneurship in economicdevelopmentProblems and challenges of entrepreneurship inNepalRole of government for small business andentrepreneurshipWhat is EDP?
Entrepreneurship• It is the act of being anentrepreneur, which can bedefined as-"one who undertakes innovations,finance and business acumen in aneffort to transform innovationsinto economic goods".
The entrepreneur acts as a trigger head to givespark to economic activities by hisentrepreneurial decisions.Entrepreneurs act as catalytic agents in theprocess of industrialization and economic growth.
Entrepreneurs:Explore opportunitiesConvert ideas into viable businesspropositionProvide new products and services to thesociety by bringing together andcombining various factors of production.Change life style of the people.
WHAT ENTREPRENEURS DO?EMPLOYMENT & INCOME GENERATIONENTERPRISESENTREPRENEURSTaxes/Govt.RevenuesPovertyAlleviationHigher Productivity &InnovationsOutput &ExportsWealth
Role of Entrepreneurship in economicdevelopment(1) Promotes Capital Formation(2) Creates Large-Scale Employment Opportunities(3) Contributed towards innovation and R & D(4) Promotes Balanced Regional Development(5) Reduces Concentration of Economic Power(6) Wealth Creation and Distribution(7) Increasing Gross National Product and Per CapitaIncome(8)Improvement in the Standard of Living(9)Use of Local Resources(10) Preventing Industrial Slums
(1) Promotes Capital FormationEntrepreneurs promote capital formation bymobilising the idle savings of public.They employ their own as well as borrowedresources for setting up their enterprises.Such type of entrepreneurial activities lead tovalue addition and creation of wealth, which isvery essential for the industrial and economicdevelopment of the country.
(2) Creates Large-ScaleEmployment OpportunitiesEntrepreneurs provide immediate large-scaleemployment to the unemployed which is achronic problem of underdeveloped nations.In a global scenario, 34 millions of freshemployment opportunities created byentrepreneurs from the period of 1980.Entrepreneurs play an effective role inreducing the problem of unemployment in thecountry which in turn clears the path towardseconomic development of the nation.
3) Contributed towardsinnovations and R & DAlmost 2/3 % of all innovationsare due to the entrepreneurs.Technological progress alonecannot lead to economicdevelopment unlesstechnological breakthroughs areput to economic use byentrepreneurs.It is the entrepreneur whoorganizes and puts to use capital,labour and technology in thebest possible manner for thesetting up of his enterprise.
Eg:- on march 15, 2011 , the marketcap ofApple company was $547.17bn (now topped $600 bn) which ismore than the GDP of Poland(merely $ 531.8 bn).CNN point out that Belgium,Sweden, SaudiArabia &Taiwan areeach worth less thanApple’s marketcap.
(4) Promotes Balanced RegionalDevelopmentEntrepreneurs help in promoting a countrysexport-trade, which is an important ingredient ofeconomic development.They produce goods and services in large scale forthe purpose earning huge amount of foreignexchange from export in order to combat the importdues requirement.Hence import substitution and export promotionensure economic independence and development.
(5) Reduces Concentration ofEconomic PowerIndustrial development normally lead to concentration ofeconomic power in the hands of a few individuals whichresults in the growth of monopolies.In order to address this problem, a large number ofentrepreneurs need to be developed, which will helpreduce the concentration of economic power amongst thepopulation.
(6) Wealth Creation andDistributionIt stimulates equitable redistribution of wealthand income in the interest of the country to morepeople and geographic areas, thus giving benefitto larger sections of the society.Entrepreneurial activities also generate moreactivities and give a multiplier effect in theeconomy.
(7) Increasing Gross NationalProduct and Per Capita Income Entrepreneurship help increasing gross national productas well as per capita income of the people in a country.Increase in gross national product and per capita income ofthe people in a country, is a sign of economic growth.
(8) Improvement in the Standardof LivingEntrepreneurship play a key role in increasing the standardof living of the people by adopting latest innovations in theproduction of wide variety of goods and services in largescale at a lower cost.This enables the people to avail better quality goods atlower prices which results in the improvement of theirstandard of living.
(9) Use of Local ResourcesEntrepreneurs proper use the resources which canresult in the progress or development of that areaand creating the local employment too.
Industrially developed areas are faced with problem ofindustrial slums, which result in over burdening of civicamenities and adverse impact on the health of people.Dispersal of industries can help in the overcoming of thisgrave problem.Support to entrepreneurs for setting up their enterprisesin industrially backward areas. This will also help inreducing pollution and overtaxing of civic amenities.
Problems and challenges ofentrepreneurship in Nepal
Because…….Limited financial resourcesLack of proper entrepreneurial education andtraining facilitiesLow rate of return from industrial investmentConservative lending policy of banks and financialinstitutionsLack of adequate protection to investorsUnstable and unsuitable economic and industrialpolicies of the government
Wide-spread corruption in the public sector andthe aspiration of many people in the privatesector to be rich overnight instead of puttingefforts to the industrial developmentPolitical instability[Dr. Fatta Bahadur K.C( Reader, Nepal Commerce Campus,Tribhuvan University, Kathmandu.) , 1989 & 2003].
Role of government for smallbusiness and entrepreneurshipCreation of investment-friendly climateProvision of Adequate Capital:-It is essential to provide adequate financial facilities especially to meet the fixedand working capital requirements of the concerned industries. So, the lendingpolicy of Development banks, Commercial banks and other financialinstitutions should follow more liberal and practical policies. Similarly,procedural simplification is required while investing in productive sector.Protection to the Investors :-It is especially important to provide adequate protection to the industrialinvestors. Most industries have failed to protect their industry from thecompetition of foreign products. Now Government should adopt anappropriate and realistic policy to protect and develop industries within thecountry.
Suitable Government Policy:-Only clear and consistent economic and industrial policy can help toinduce entrepreneurs. Government should formulate clear, liberal andattractive economic and industrial policies.Expansion of Institutional Services :-The adequate institutional services are required to encourageentrepreneurs. The concerned agencies, both the financial anddevelopment institutions should be directly involved to encouragepotential investors for investing their funds in productive sectors.NPEDC (National Productivity and Economic Development Centre)should launch appropriate Entrepreneurship developmentprogram (EDP).
What is EDP?????Starting a small business can be challenging. So, Entrepreneurs and smallbusiness owners are faced with many hurdles and sometimes don’t havethe resources they need to help them make tough decisions. Thus thisprogram prove to be effective for small business owners in suchsituations.An Entrepreneurship Development Program (EDP), of 6-8 weeksduration, aims at training the Graduates and the Diploma holders in theessentials of conceiving, planning, initiating and launching an economicactivity or an enterprise successfully.The program content includes class room training on essentials ofentrepreneurship survey of the prevalent socio - economic scenario,identification of business opportunities, role and function as well asschemes of assistance offered by various constituents of the supportsystem.