The Role of Entrepreneurs in the Economies of Nations
Entrepreneurs have a critical role to play in shaping the futures of the economies of nations.
By creating value through starting businesses and ventures, they ensure that the wealth of the nations increases.
Similarly, by exporting goods and services, they ensure that the economies earn valuable foreign exchange that is vital for the countries to import the necessary goods and services.
In addition, by creating jobs, they ensure that the people in the nations are gainfully employed. Moreover, through their social causes and championing of public good endeavors, they actualize sustainability, social justice, and environmental responsibility.
Perhaps the biggest contribution or the underlying theme that runs through all these contributions is their innate ability to innovate that ensures speedy and efficient development of nations and their economies.
As we shall discuss in the next section, innovation is the differentiator between the success and failures of nations and their economies.
Innovation is the Key to Success
To understand the role and the importance of innovation, one must consider how Europe pulled ahead of China and India through the “great divergence” in the time of the First Industrial Revolution in the late eighteenth and nineteenth centuries. Before this, Asia was the dominant economic player in the world.
However with the advent of the First Industrial Revolution, European economies took off in a big way. The reason for this was the entrepreneurial spirit and the innovative use of technology in the Continent which was responsible for its aggressive growth and subsequent dominance which continues to this day.
Hence, this aspect which underscores the importance of innovation is the biggest contribution that entrepreneurs make in the development of nations.
Indeed, the First Industrial Revolution is a testament to the individual hard work, collective innovation, and national renaissance which was all due to the astounding courage and initiative displayed by the entrepreneurs.
How Some Nations Prosper and others Fail
Turning to the aftermath of the world wars when countries had to be rebuilt and economies had to be developed, it is indeed the case that through the same qualities noted above, the entrepreneurs in some countries succeeded in ensuring that those countries emerged out of the rubble and the chaos to become successes.
We are talking about Germany, Japan, and some Asian countries such as South Korea wherein the entrepreneurial spirit in addition to and with some help from the governments ensured that these economies pulled ahead of others such as China and India.
Indeed, if not anything, the governments and the state should at least not come in the way of the entrepreneurs and stifle their creativity and innovation if they cannot enable and empower them. As we shall discuss in the next section, China realized this aspect sooner than India which again accounts for the differences in the development of these countries.
The Role of the State
As mentioned earlier, the unleashing of entrepreneurial spirit and dynamism in addition to innovation calls for an increased role of the state where it has to provide the infrastructure or the hardware for the entrepreneurs to succeed.
Similar to a computer where the software sits on top of the hardware, the entrepreneurs can succeed by creating the necessary software only when the hardware is in place. It is indeed to the credit of the Chinese government and the leadership that though this realization came late, they were able to jumpstart the economy and ensures that their country becomes an economic superpower.
As for India, the fact that it has realized that it is better late than never in ensuring that entrepreneurial energies are unleashed means that it is on its way to emerging from the abyss of underdevelopment and backwardness.
Entrepreneurs keep Economies going
Some experts in recent years have gone so far as to state that it is the entrepreneurs who keep the countries from collapsing due to social and political factors. Imagine how a typical day begins and plays it out in our everyday lives.
No matter what would have happened the previous day, the first thing you get in the morning is the milk and the essential goods in addition to the newspapers and other items that are critical for everyday existence. Who delivers all these items rain or shine are the entrepreneurs millions of whom contribute and lubricate the levers of the everyday lives of peoples and shape the economic trajectories of nations.
Indeed, the fact that it is entrepreneurs who keep the country from collapsing is made clearer when one considers how countries like India seem to bounce back from crises and step back from the abyss whenever there is a social or a political event that threatens the socioeconomic fabric of the nation.
As the founder of modern economics, Adam Smith, put it, it is the economic incentives of the entrepreneurs that ensures that you get bread on your tables every morning.
In other words, the entrepreneur is not being altruistic when he goes about his or her business. Rather, it is his selfishness in making a profit that contributes to the economies of nations.
Therefore, one must realize the fact that profit is not a bad word and that once everybody agrees that economic aspects keep us going, and then all of us would benefit since we would think rationally and objectively about the need to create an ecosystem for ourselves and by extension, contribute to the economic development of nations.
In short, let us celebrate the astounding entrepreneurial spirit in ourselves and in others, and instead of creating impediments, let us ensure that we enable and empower ourselves and others in fostering creativity and innovation.
Authorship/Referencing - About the Author(s)
The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.
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