Mais conteúdo relacionado



  1. The Role of Entrepreneurship in Economic Development
  2. The Role of Entrepreneurship in Economic Development There are various definitions of entrepreneurship. However, the key concept is innovation. This refer to new or different ways of doing things, like technology, marketing, human relations, management, and so forth. When an individual creates a new product, it is innovation. When he sells his product in a different approach, it is also innovation. Evidently, a more efficient way of producing goods and services contributes to economic development. Likewise, a more economical and faster method of distributing goods and service accelerates economic development. A more appropriate system of utilizing the inputs of production, such as money, materials, machines and manpower, can favorably contribute to economic development. All the three aforementioned situations comprise entrepreneurial activities.
  3. The Role of Entrepreneurship in Economic Development In view of the innovative nature of entrepreneurship, it is capable of generating more jobs, incomes, goods and services. Ultimately, this means better economy and higher standard of living for the people. However, the real contributions of entrepreneurship is measured in terms of the welfare of the masses. It should be Filipino entrepreneurship for Filipino economic development – whose benefits seep down to the level of the masses.
  4. Entrepreneurship Defined Entrepreneurship, according to Professor Nathaniel Left, is the capacity for innovation, investment and expansion in new markets, products and techniques. This definition implies that an enterprise is at work whenever an individual takes the risks and invest resources to make something unique or something new, designs a new way of making something that already exists, or creates new markets. However, entrepreneurship is not only applicable to business enterprises. It can also be done in schools, hospitals, and other social services institutions. Entrepreneurship has special or extra-ordinary features, such as the creation of something new or something different. In short, it is innovation which distinguishes entrepreneurship from other activities.
  5. Entrepreneurship Defined Any person who can create something new or something different has already acquired a competitive advantage. Because it means an improvement. Consumers like to buy an improved product or service. Japanese businessmen are successful due to their innovations. If someone can introduce a better way of public service, it is certainly good for the people, especially for the poor masses. Any new technology that can reduce money, labor and time is obviously favorable to the economy. Hence, the importance of entrepreneurship for ordinary people, businessmen and the government.
  6. Entrepreneurship Defined Professor Hirsh said: “Entrepreneurship is more than a word. It is a mission. We must perceive opportunities inherent in change; we must create a desire for pursuing the opportunities that arise; and we must create an environment in which success is possible and the consequences of failure are tolerable.”
  7. Economic Development and Growth Explained Development is a process while growth is a product. So, growth is the result of development. In agriculture, the application of fertilizers, insecticides, labor, machines and other productive inputs represents a process or development. The results or outputs are crops like rice, corn or sugar. In simple terms, development is input while growth is the output. In economics, development does not only include economic factors like money, machines and materials, but also other factors which are non-economic, such as culture, values, religion, government and education. These mixtures of economic and non-economic factors
  8. Economic Development and Growth Explained which are applied in the creation of goods and services constitute economic development. Clearly, it is not effective to solve economic problems with economic solutions alone. For instance, extravagance is not only an economic problem. It is also caused by unfavorable culture or social values. In poor countries which are usually dominated by poverty, illiteracy, unjust distribution of wealth, income and power, the concept of economic development has a more relevant definition. Under this 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.
  9. Economic Development and Growth Explained What are needed in poor countries are more economic activities through the operations of factories, agricultural production, trade and service industries. In concrete terms, such economic activities multiply jobs and incomes. However, social justice must prevail. There should be a fair distribution of wealth, income and power. Unfortunately, it is almost impossible to redistribute wealth in poor countries. Their land reform programs are failures, because there was no political will on the part of top government officials who obviously prefer to sustain the existing socio-economic order.
  10. Economic Development and Growth Explained In view of the very limited access to economic opportunities by the masses, a better option is to develop an entrepreneurial class. With the strong support of the government and the private sector, small scale enterprises can flourish in the countryside. Such community-based projects can generate jobs and incomes for the poor. This is all what they need to uplift their social and economic conditions.
  11. Development and Growth Theories LAISSEZ FAIRE THEORY These are French words introduced by the Physiocrats to mean economic freedom. This theory explains that the government should not interfere in economic activities. It is absolute free-enterprise economy. The role of the government is only confined in education, justice and public works. It is argued that with economic freedoms, business can be more efficient through free competition. And this benefits the economy.
  12. Development and Growth Theories 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. These generate large-scale employment resulting to more incomes for more people. Such situation increases the demand for goods and services. This means more production, and this enhances economic development.
  13. Development and Growth Theories 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. Such theory was earlier supported by the Physiocrats. They claim that all wealth comes from the land. People cannot live without food and natural resources. Hence the importance of land or agriculture.
  14. Development and Growth Theories HARROD-DOMAR THEORY This was conceptualized by Sir Harrod of England and Professor Domar of the U.S. The key factor in economic growth is physical capital like machines. The theory claims that more products can be produced through the use of machines. In other words, production is far more efficient with the use of machines. This theory appears to explain the industrial success of rich countries.
  15. Development and Growth Theories KALDOR THEORY Nicholas Kaldor maintains that the key factor is technology. 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 like the U.S., Japan, Great Britain, France, Italy and Germany. In the case of Japan, it can raise vegetables without the use of soil. Only fertilized water is used. Such technology has been exported to the Middle East where agricultural lands are scarce.
  16. Development and Growth Theories INNOVATION THEORY This was developed by Joseph 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, and be able to transform theory into reality. It is the innovator who introduces change for the better.
  17. Development and Growth Theories NON-ECONOMIC THEORIES There are several other theories which are non-economic in nature. Their key factors are political stability, efficient public administration, open society, and positive cultural values. Maxx Weber, author of Protestant Ethics and the Spirit of Capitalism, claims that Protestant countries are more prosperous than Catholic countries and others. He says that thrift, industry and an entrepreneurial spirit have contributed much to the economic growth of Protestant countries.
  18. Development and Growth Theories Not a few economists argue that corruption in the government is the No. 1 enemy of economic development in Asia. Others say that inefficient public administration has resulted to wasteful and improper use of resources. Likewise in a close society, there is no economic and social mobility. The poor have no right to improve their miserable conditions. All these unfavorable factors clearly drive away economic growth. IN the case of highly developed countries, their values and institutions are conducive to economic growth. Their government are efficient and honest. Their values such as punctuality, industry, and dedication are effective instruments of development. Above all, they have many good entrepreneurs who have created employment and wealth for their economies.
  19. The Importance of Entrepreneurship Statistics in both rich and poor countries show that small enterprises are leading in the generation of jobs and wealth. In fact, the small business sector saved the U.S. economy from economic stagnation or depression during the 1960s and 1970s. Professor Peter Drucker, America’s foremost management specialist, stated that the entrepreneurial economy had been the most important development in American economy. It created 335 million jobs at a time when traditional big business and the government has lost 5 million jobs in 1970s and early 1980s. In the Philippines, most of our economic activities fall under the micro and small business categories. There are many retailers, vendors, and other small sole proprietors. As long as they perform some risk-taking ventures, innovations, and creative undertakings, they are considered entrepreneurs.
  20. The Importance of Entrepreneurship Because of the proven importance of entrepreneurship, subjects in entrepreneurship have been included in the curriculum of high schools, colleges and universities in many countries. Harvard President Derek Bok said: “The Harvard Business School is beginning to see that its role is not just training general managers, but also training and providing preparation for people to start their own business…It is a kind of a new freedom to go out and take some risks and run your own show… It’s a kind of a new frontier for people of some boldness and creativity.”
  21. Contributions of Entrepreneurs 1. Develop new markets. Under the modern concept of marketing, markets are people who are willing and able to satisfy their needs. In economics, this is called effective demand. Entrepreneurs are resourceful and creative. They can create customers or buyers. This makes entrepreneurs different from ordinary businessmen who only perform traditional functions of management like planning, organization and coordination.
  22. Contributions of Entrepreneurs 2. Discover new sources of materials. Entrepreneurs are never satisfied with traditional or existing sources of materials. Due to their innovative nature, they persist on discovering new sources of materials to improve their enterprises. In business, those who can develop new sources of materials enjoy a comparative advantage in terms of supply, cost and quality. In Japan, due to the extreme scarcity of local raw materials, entrepreneurs give top priority to research and development in order to discover alternative materials.
  23. Contributions of Entrepreneurs 3. Mobilize capital resources. Entrepreneurs are the organizers and coordinators of the major factors of production, such as land, labor and capital. They properly mix these factors of production to create goods and services. Capital resources, from a layman’s view, refer to money. However, in economics, capital resources represent machines, buildings and other physical productive resources. Entrepreneurs have initiative and self-confidence in accumulating and mobilizing capital resources for new business or business expansion.
  24. Contributions of Entrepreneurs 4. Introduce new technologies, new industries and new products. Aside from being innovators and reasonable risk-takers, entrepreneurs take advantage of business opportunities, and transform these into profits. So, they introduce something new or something different. Such entrepreneurial spirit has greatly contributed to the modernization of our economy. Every year, there are new technologies and new products. All of these are intended to satisfy human needs in a more convenient and pleasant way.
  25. Contributions of Entrepreneurs 5. Create employment. The biggest employer is the private business sector. Millions of jobs are provided by factories, service industries, agricultural enterprises, and the numerous small-scale businesses. For instance, the super department stores like SM, Uniwide, Robinson and others employ thousands of workers. Likewise, giant corporations like SMC, Ayala and Soriano group of companies are great job creators. Such massive employment has multiplier and accelerator effects on the whole economy. More jobs mean more incomes. This increases demand for goods and services. This stimulates production. Again, more production requires more employment.
  26. Participation of Women As stated earlier, human resources are the most important productive resources. Unfortunately in poor countries or underdeveloped economies, most of the women are engaged in unproductive activities. It is true that in the rural areas, women help in the farms. But their economic contributions are insignificant. Even without their help, farm production remains the same. This simply means there is no need for them to work in the farms. Their labor is just a surplus one. In economics, such situation is referred to as disguised unemployment. Women constitute a big portion of the total population. Their exclusion from productive enterprises is a great economic loss. They
  27. Participation of Women should be producers and not merely consumers. The business potentials of women have gained the attention of some United Nations agencies and other non-governmental organizations (NGOs). As a result, there are now programs/projects for women, especially in the rural areas of poor countries, which are envisioned to train women for business enterprises and livelihood endeavors. Bangladesh, formerly East Pakistan, is a very poor country. Women comprise about 49% of the population. They were bypassed by the development programs of their country. Most of the women are unschooled, socially depressed and have conservative attitudes.
  28. Participation of Women Having recognized the vast economic possibilities of including women in the development scheme of the country, the government of Bangladesh finally set up entrepreneurial projects for poor rural women. Skills training were conducted for micro handicrafts or cottage industry enterprises. The program of the government is planned to encourage rural women to be entrepreneurs. Credit facilities have been extended to entrepreneurial projects. Women’s participation in socio-economic development as entrepreneurs has tremendous impact in terms of additional jobs, incomes, goods and services. This can speed up the economic development of Bangladesh. If all poor urban and rural communities have small enterprises run by women, poverty will be greatly reduced. According to Schumacher, the legendary author of Small Is Beautiful, the presence of one small factory in every village heralds the coming of prosperity.
  29. Filipino Entrepreneurial Economy One of the top programs of the government is the development and promotion of Filipino entrepreneurship. There are many government agencies and private organizations which extend financial and technical assistance to micro and small-scale enterprises. Many are not aware of such assistance, especially the poor and unschooled rural folks. Those who know are not enthusiastic about the program due to numerous conditions and paperworks, not to mention red tape. For the same reason, the rural poor prefer to depend on usurers for their credit needs, rather than borrow from lending institutions. Our economic resources are mostly in the hands of few local elite and multinational corporations. A great majority of the people are workers, laborer and office clerks. They only get salaries which are not
  30. Filipino Entrepreneurial Economy even enough to support their basic needs. Such unjust distribution of income can be corrected by giving people easy access to business activities. Through business, even the poor are likely to improve their social and economic conditions. Claro M. Recto, considered the father of modern Filipino nationalism, said that we need economic nationalism to attain real economic growth. He defined economic nationalism as the control of the economic resources of the country by its own people, and their use of such resources for their own benefit and enjoyment. Recto also claimed that the cause of our poverty is that we allow foreigners to dominate our economy. He blamed the U.S. educational system.
  31. Filipino Entrepreneurial Economy “The educational system fired our people’s desire for political liberty, but it purposely neglected to develop economic nationalism among the citizens, and instead insidiously inculcated in them ideas of economic dependence on America.” At present, our educational system should stress patriotism and economic nationalism. Although this is mentioned in our Constitution, it appears that colonial mentality is still infused in the minds and actions of many Filipinos. Such attitude is clearly counter-productive as far as the Philippine economy is concerned. Pride and preference for foreign goods, especially American products, are still strong. Peoples in other countries patronize their own products. And this is good for their economy.
  32. Filipino Entrepreneurial Economy Our educational system should also emphasize in its curriculum the importance of local entrepreneurship. By and large, Filipinos are employee-oriented, especially for white-collar jobs. We are not risk- takers. Many of us are afraid to put up our own business because of the possibility of bankruptcy. Such lack of entrepreneurial spirit, particularly among professionals, has encouraged foreigners to take advantage of our cheap labor and rich natural resources. They are the ones who are now rich. And they are our masters in our own country.
  33. VALUING • List down your three main takeaways in the topic “The Role of Entrepreneurship in Economic Development.” • What particular learning/lesson/realization have you gained in this topic that you think could eventually contribute to your future role as an entrepreneur.