Introduction

to
Entrepreneurship
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Everyday is a chance to learn.

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Lecture Content
○ Role of Entrepreneurship in Economic Development
○ Definition of Entrepreneurship
○ Economic Development and Growth
○ Development and Growth Theories
○ Importance of Entrepreneurship
○ Contributions of Entrepreneurs
 1.
Role of
Entreprenuership
in Economic
Development
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1. Promotes Capital Formation –
Entrepreneurs promote capital formation by mobilizing the idle
savings of public.
2. Creates Large-Scale Employment Opportunities –
It’s Role: Entrepreneurs provide immediate large-scale employment
to the unemployed which is a chronic problem of
underdeveloped nations.
3. Wealth Creation and Distribution – It stimulates equitable
redistribution of wealth and income in the interest of the
country to more people and geographic areas, thus giving
benefit to larger sections.
4. Increasing Gross National Product and Per Capita Income –
Entrepreneurs are always look out for opportunities. In this
way, they help increasing gross national product as well as
per capita income of the people in a country.
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5. Improvement in the Standard of Living – Increase in standard

of living of the people is a characteristics feature of economic
development of the country.
6. Promotes Country’s Export Trade – Entrepreneurs help in
It’s Role: promoting a country’s export-trade, which is an important
ingredient of economic development.
7. Creating Innovation – An entrepreneur is a person who
always look for changes. Apart from combining the factors of
production, he also introduces new ideas and new
combination of factors.
8. Entrepreneurs Create New Businesses – Path breaking
offerings by entrepreneurs, in the form of new goods and
services, results in new employment, which can produce
cascading effect or virtuous circle in the economy.
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9. Entrepreneurs Also Create Social Change – Through their

unique offerings new goods and services, entrepreneurs
break away from tradition and indirectly support freedom by
reducing dependence on obsolete systems and technologies.
It’s Role: 10.Personal Growth -
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Definition
of
Entreprenuership
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- According to Professor
Nathaniel Left, it is the
- This refer to new and capacity for innovation,
The key concept different ways of investment and
is “innovation” doing things, like expansion in new
technology, markets, products and
marketing, human techniques.
relations,
management and so
forth. - It has special or extra-
ordinary features such as
creation of something
new or something
different.
 3.
Economic
Development and
Growth
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What is Development
Economic
Development • Process
and Growth? • Input
Growth
• Product
• Output

What is
Economic ○ In economics, development
does not only include
Development economic factors but also
and Growth? other factors which are non-
economic.
○ These mixtures of economic
and non-economic factors
which are applied in the
creation of goods and services
constitute economic
development.
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○ Under socio-economic context,
economic development refers
to a progressive process of
improving human conditions
by eliminating or reducing
poverty, unemployment,
disease, illiteracy, injustice and
exploitation.
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1. Laissez Faire Theory. These are French words introduced
by the Physiocrats to mean economic freedom.

Development ○ This theory explains that the government should not

interfere in economic activities. It is absolute free-
and Growth enterprise economy.
Theories
2. Keynesian Theory. The government should play the key
role in economic development, particularly in less
developed countries, or those with depressed economic
conditions.

○ This theory contends that during economic depression the

government should put up massive public works, like
construction of roads and bridges, and other labor
intensive projects.
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3. Ricardian Theory. This is the theory of David Ricardo, an
English Classical economist. He believes that the key
factor in economic growth is land. This means that
agriculture plays a major role in economic development.
Development
and Growth 4. Harrod-Domar Theory. This was conceptualized by Sir
Theories Harrod of England and Professor Domar of the United
States.

○ The key factor in economic growth is physical capital like

machines.

○ The theory claims that the more products can be produced

through the use of machines.

5. Kaldor Theory. Nicholas Kaldor maintains that the key

factor is technology.
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○ This theory explains that the application of modern
technology in the production of goods and services has
been responsible for the economic success of the highly
developed countries.
Development
and Growth 6. Innovation Theory. This was developed by Joseph
Theories Schumpeter.

○ He stresses the role of innovators or entrepreneurs in

economic development.

○ Schumpeter says that it is the innovator who has the

courage and imagination to handle old systems, be able to
transform theory into reality.

7. Non-economic Theories. There are several other theories

which are non-economic in nature.
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○ The key factors are: political, stability, efficient public

administration, open society, and positive cultural values.
Development
and Growth
Theories
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Statistics show that small enterprises lead in

generation of jobs in both rich and poor countries.
Even prestigious schools, like Harvard, recognize the
importance of entrepreneurship. Thus, they offer
courses in entrepreneurship.
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1. Develop new 2. Discover new sources 3. Mobilize capital

markets. of materials. resources.
Contributions of o Effective Demand ○ Entrepreneurs are ○ Entrepreneurs are
Entrepreneurs o Entrepreneurs are never satisfied with the organizers and
resourceful and traditional or existing coordinators of the
creative. sources of materials. major factors of
○ Due to: innovative production.
o Create customers
or buyers. nature. ○ They mix these
factors of
production to
create goods and
services.
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4. Introduce new technologies, 5. Create employment.

Contributions of new industries and new

products.
○ The biggest employer is
private business sector.
Entrepreneurs ○ Entrepreneurs take ○ More jobs means more
advantage of business income.
opportunities and ○ Increases the demand for
transform these into goods and services.
profits.
○ Stimulates production.
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Thanks!
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