Entrepreneurship is regarded as the engine of economic development of a country. It is important for individual, social and national development. This is especially true in the developing world, where successful small businesses are the primary engines of job creation and poverty reduction. The role of entrepreneurship in Nepalese economy may further be mentioned through the following points.
1. Formation of capital:
Capital is the most important prerequisite for the economic development of a country. It involves physical, human and intellectual capital. Entrepreneurship promotes capital formation by mobilizing savings of the people. Abundance of capital promotes economic activities.
2. Employment generation:
Employment generation is the most important objective of the government. Entrepreneurship is very important for employment generation. Entrepreneurship involves starting new ventures by setting up a new enterprise. Entrepreneurs create employment for self as well as others. Employment enhances living standards of the people. It eventually helps to uplift the economic development of the country. The process of entrepreneurship activity generating employment is termed “Schumpeter effect”. It has been observed that, unemployment is negatively related to new-firm startups. As new businesses are established, resources are stimulated and unemployment reduces substantially. A low rate of entrepreneurship culture and skills in any society may be a consequence of lower economic growth, which also reflects higher levels of unemployment.
3. Balanced regional development:
Entrepreneurship is one of the key factors for balanced regional development of a country. Entrepreneurs set up ventures in different parts of the country to exploit the factors of production, capture larger markets, and enjoy better facilities granted by the government. This leads to the balanced regional development of the country.
4. Resource mobilization:
Entrepreneurship involves identification and exploitation of opportunity. For this, they bring resources together and manage them to create utilities in the form of goods and services. Effective resource mobilization enhances both production and productivity. Technology is promoted to enhance resource efficiency.
5. Promotion of export:
Entrepreneurship is important for promotion of export. It promotes development of trade and industry. Entrepreneurs constantly search for development of new products as well as markets. They even attempt to serve foreign markets by exporting their products. Export helps in earning foreign currency. It also helps to maintain the balance of payment. All these promote the economic development of the country.
6. Enhancement of productivity:
Productivity is the ratio between input and output. Entrepreneurship promotes innovation for opportunity and effective utilization of the resources. It also encourages the use of modern technology. The quality of the products and services is ensured. It eventually helps to achieve production as well as productivity.
7. Equitable distribution of wealth:
Entrepreneurship promotes equitable distribution of wealth. It promotes employment opportunity to all sectors of the society. Similarly, it encourages setting up ventures in different parts of the country. It reduces economic concentration from corporate sectors. Self employment is promoted. All these help to have an equitable distribution of wealth.
8. Backward and forward integration:
Entrepreneurship induces backward and forward linkages. It stimulates the process of economic development in a country. Backward linkage is a form of vertical linkage that involves the purchase of the suppliers. It results in improved efficiency and cost savings. In contrast, forward linkage involves linkage with distributors.
9. Political stability:
Entrepreneurship promotes economic opportunity to the people. It further strengthens democracy which eventually results in greater political stability. All these help to bring prosperity in a country. All the above discussed points help to contribute towards self employment directly or indirectly. Further, they also help generate employment for others. This can be better justified with small and medium enterprises since they do not require high capital as well as expertise.
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