Entrepreneurships play an important role in the economic growth of a
country. Critically evaluate this statement and illustrate with examples.
I/ INTRODUCTION:
Economic growth is an essential part which can determine the competitiveness and progress not
only on a society level but also on the standards of living in each country. It is a function which
includes various different factors from each nation such as climate type, level of education,
industrialized rate, GDP, and technology. However, there is one more important factor which
nobody can deny the huge impact of it on economic growth: entrepreneurship. It seems like
entrepreneurship is ‘at the heart of national advantage’ (Porter, 1990, p. 125). Since economies
continue to integrate due to globalisation, entrepreneurship is on an upwards trend. This essay will
identify and discuss the three main benefits afforded to an economy through entrepreneurs and
entrepreneurship and between them are some minor negative effects. The first advantage of
entrepreneurships is to reduce the unemployment rate. The second advantage is that
entrepreneurships will lead to many innovations for the economy. And the last advantage is about
new markets which are created by entrepreneurships.
II/ BODY:
Paragraph 1:
To begin with, unemployment is one of the most serious and prickle issues which many economies
around the world are facing with. It is believed that entrepreneurship will be the greatest weapon
to counteract this issue. As the number of enterprises grow, it will creates more jobs for people in
direct or even indirect ways. It can be easily understood that an entrepreneur can create jobs
directly due to self-employment and indirectly by opening new companies it means more staff will
be needed. For example, imagine that if hundred people start as entrepreneurs, they not only create
jobs for themselves but also provide jobs for other hundred more people. Audretsch and Thurik
(2000) also present a piece of empirical evidence to prove that wherever there is an increase in the
number of business owners, the unemployment rate of that place will decrease. According to
Markinblog (2020), in the United States, which is one of the most developed country in the world,
there are about 15 million Americans all full time self-employed and they has employed 60.6
millions people. In this way, entrepreneurs play an effective role in clearing the path for the growth
of economy in one nation. The example about Sri Tony Fernandes, who is the founder of AirAsia,
has drawn worldwide attention. He is one of the most successful entrepreneurs who contributed to
his country's economic development– Malaysia by providing jobs to employees. He has owned
around 17, 000 employees since 2016. However, as the proverb goes “Every coin has its two sides”
and this issue is no exception. Some may argue that when there are more and more companies
founded, it will be synonymous with the higher level of capital investment needed. As some
businesses require a lot of money to get started, so more new entrepreneurs mean more debt costs
in the economy. Nevertheless, it just often appears in the beginning stage of an organization, and
these investments are totally balanced because after the entrepreneurs get profits, the investors will
also have some benefits too.
Paragraph 2:
Another striking function of entrepreneurs in economic progress is that it can lead to various
innovations. Harbison (1965) consists of entrepreneurs is among one of the greatest motivators for
innovations. The main reason why innovation is important for the economic development is
because through it many inventions which are required by the society nowadays will appear.
As Schumpeter (1934) stated, an entrepreneur is defined as an individual or a group who is able
to find out and apply new methods to invent something new or to do old things but in a new
way. Imagine that without innovation, it has the same meaning with no new things, and without
anything new, there will be no progress in any organization. And moreover, the most contribution
when saying innovation can spark the economy development is that as the definition above,
innovations mean generating some new methods or services to help to boost the productivity, so a
company can produce a bigger number of products. By this way entrepreneurship can not only
make fortune for entrepreneurs but also seen as one of most efficient movers for the growth of an
economy (Hisrich, et al. 2010). Without doubt, contemporary life of humans is all run by
innovations. The common instance for this type of entrepreneurship is about Netflix. So Netflix
came out to society and did a good job as an alternative for cinemas and also brick-and-mortar
DVD rental stores. The brand reinvented the delivery of DVDs in a modern way and transformed
movie rental altogether with streaming service too. For these functions, they can inevitably explain
the success of Netflix. It can be said that through the release of Netflix, the door for innovations
in home-entertainment is opened. In 2019, the company’s annual revenue amounted to over 20
billion U.S. dollars, continuing the impressive year-on-year growth Netflix has enjoyed over the
last decade. On the other hand, many people argue that not all innovations will be successful and
good for human life as the old saying goes: “Pioneers take the arrows, settlers take the land”. Some
new goods may be time-consuming to produce or have poor quality, so they will not help much
for economic growth. Nevertheless, to refute this argument, the changes we dread most may
contain our salvation. Although sometimes innovative products are not positively reviewed by
customers, more innovations mean more competitiveness level among businesses existing. And
this phenomenon will not only can fulfill the customers demands but also can boost the economy
growth when the productivity is higher.
Last but not least, one more positive influence of entrepreneurship on an economy that couldn’t
be denied is the rise of new markets when level of competitiveness is boosted. Because the
domestic markets will not be enough for all new companies so entrepreneurs maybe driven to seek
new markets for their products and services. These markets can not only be in the domestic sphere
but also can be outside the national’s frontier. Thus this mode will bring a nation with foreign
revenue and increase the prosperity of the economy as a whole. Besides that, local communities
will have a chance to export their local products to global markets. And when it comes true, the
productions of that country or even the reputation will be widely recognized in international level.
This type of entrepreneurship can be utilized as a tool to enhance the global collaboration (Stuart
Holliday, 2019). There are many examples to illustrate for this success of entrepreneurs, but the
most well-known maybe about the founder of Alibaba company, Jack Ma. He and his team had
cooperate to found Alibaba.com, which was a leading platform for worldwide wholesale trade in
1999. Just needing 4 years, in May 2003, it became the China’s largest online shopping destination.
Aside from its domestic commerce popularity which is fully-recovered, Alibaba’s international
commerce retail revenue also increase around 26% year-over-year to reach at $992 million,
according to its latest earnings report. Nowadays, Alibaba has expanded its market to many places
all over the world like Korea, Malaysia, Hong Kong, etc. But there are some people strongly
suppose that when there are more and more new businesses it will cause the phenomenon of market
saturation. If in the marketplace, there are so many same types of products but were put under
different brands, customers will confuse which one they should choose. However the bright side
of such a phenomenon is that it causes all the players in the market to re-evaluate their operational
capabilities, increase value addition, lower costs and become more efficient. This will lead to the
economy of a nation becoming more dynamic.
III/ CONCLUSION:
To sum up, based on everything that has been discussed above it is apparent that the positive
impacts of entrepreneurs on an economy far outweigh the negative impacts. It can not be denied
that entrepreneurs play a crucial role in forming a dynamic economy and an engine of economic
growth. The helpful level of entrepreneurship in economic development varies from economy to
economy depending upon its material resources, industrial climate and the responsiveness of the
political system to the entrepreneurial function. However, it shares some same factors when
playing as a role to help to create employment opportunities not for themselves but for others as
well, lead to many innovations and open new markets for the business world. These benefits will
strongly influence a country’s economic performance. Entrepreneurs are exactly the nation
builders so each countries should learn to value their entrepreneurs, as real partners of economic
development.
.
REFERENCES:
1. Holliday, S. (2019). Entrepreneurship is the New Engine of Global Collaboration.
Retrived from https://www.entrepreneur.com/article/325800
2. Porter, Michael E. (1990). The Competitive Advantage of Nations. New York: Free
Press.
3. Audretsch, David B. and A. Roy Thurik, 2000, Capitalism and Democracy in the 21st
Century: from the Managed to the Entrepreneurial Economy, Journal of Evolutionary
Economics 10, 17-34.
4. Kiniulis, M. (2020, November 26). 11 Entrepreneur Statistics, Facts, And Trends in 2020.
Retrieved December 12, 2020, from https://www.markinblog.com/entrepreneur-statistics/
5. Schumpeter, J.A (1934,1980), The Theory of Economic Development. Oxford University
Press: London.
6. F. Harbison, "The Prime Movers of Innovation," Education and Economic
Development, eds. C. Anderson and M. J. Bowman (Chicago: Aldine Co., 1965)
235.
7. Hisrich, R.D., Peters, M.P. and Shepherd, D.A. (eds)
(2010), Entrepreneurship, 8th edn, McGraw-Hill/Irwin, New York, NY.
8.