Entrepreneurship Development

ENTREPRENEURSHIP DEVELOPMENT FOR RURAL FAMILIES 4(1+3)

Lesson 4 : Importance of Entrepreneurship Development for Farm Families

Importance of Entrepreneurship Development

Entrepreneurs organize the production process. In the absence of this function, all other resources, namely land, labour and capital would remain idle.

1. Contribution to GDP and capital formation: Increase in the Gross Domestic Product (GDP) is the most common definition of economic development. Income is generated in the process of production. So, entrepreneurs generate income via organization of production be it agriculture, manufacturing or services. Income generated is distributed among the factors of production where land gets rent, labour gets wages and salaries, capital gets interest and the residual income accrues to the entrepreneur in the form of profits.

2. Generation of employment: Every new business is a source of employment to people with different abilities, skills and qualifications. A large portion of our society gets employment in industrial sectors which solve the problem of unemployment..

3. Generation of business opportunities for others: Every new business creates opportunities for the suppliers of inputs which is referred to as backward linkages and the marketers of the output what is referred to as forward linkages. Eg: As a printer manufacturer they would create opportunities for paper, cartridge and refill manufacturers as well as wholesalers and retailers of stationery products.

4. Remarkable role in economic and industrial development of a country: Entrepreneurs establish new ventures and produce variety of goods and services. Hence modern needs of a society are satisfied and lead to a country to rapid economic and industrial development.

5. Increasing the scope of economic activities: Development does not merely mean ‘more’ and ‘better’ of the existing, it also and more crucially means diversification of economic activities–across the geographic, sectoral and technological scope. Economic development is also constrained by the supply-side pressures resulting into absence of capacity to meet the demand. Entrepreneurs mobilize local and even overseas resources to augment the productive capacity of a country.

6. Impact on local communities: Entrepreneurship, in its natural habitat, that is, small business is a great leveler. That small-scale entrepreneurship enables such marginalized groups as women, SC, ST and OBC to pursue their economic dreams. As there are no entry barriers in terms of educational qualifications, entrepreneurship is an even more attractive career option for such marginalized groups.

7. Gives benefit of innovation to the society: Entrepreneurship and innovations are directly related. Entrepreneur’s continuously search innovation and gives its maximum benefits to our society and nation

8. Establishes stability in the society: Entrepreneurs establish enterprises not only in urban areas, but also in semi-urban and rural areas. In rural areas, generally tiny, cottage and small scale industries are established, which leads to stability in our society.

9. Plays important role in balanced regional development: Entrepreneurs establish industries in all areas of the nation which decentralize economic power and leads to balanced regional development.

10. Earning of foreign exchange by export promotion: Entrepreneurs search opportunities in international market, produce goods and services as per international demand and export their products in foreign market.

11. Optimum utilization of natural resources: Entrepreneurship is a process of shifting natural resources of lower productivity and yield into an area of higher productivity and yield. Hence natural resources can be optimally utilized.

12. Pays taxes to government: Entrepreneurs earn profit by establishing and managing industrial units. This profit increases periodically and pays a large amount of taxes to government.

13. Development of subsidiary industries: Due to development of entrepreneurship banking, communication, transportation, insurance, agents etc services develop rapidly. So opportunities for development of subsidiary industries also increase.

14. Raise the living standards of society: An entrepreneur always searches for new changes, responds to them and exploits them as opportunities. In this way they produce modern and luxurious products for our society and increases living standards of the society.