Module 1 Entrepreneurship

The Role of Entrepreneurship in Economic Growth

Definition of terms    

Entrepreneur Entrepreneurship Economic Growth GDP

Who is an Entrepreneur?  A person who organizes, operates, and assumes the risk for a business venture

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Entrepreneurship 4 Aspects: 

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4 ASPECTS 

1. CREATION OF SOMETHING OF VALUE

PRODUCTS AND SERVICES THAT CAN BE SOLD FOR A PRICE

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2. DEVOTION OF TIME - towards the attainment of personal goals: PROFIT PRODUCE GOODS & SERVICES FOR THE COMMUNITY PROVIDE EMPLOYMENT PROVIDE INCOME

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3. Assumption of risk

the possibility of failure and losing  whatever they put in

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4. Greater Rewards - there is also a possibility of generating a profit and business expansion.  And the prestige of being a business owner, which provides intrinsic satisfaction

ROLE OF ENTREPRENEURS IN THE ECONOMY

They are vital in the economic growth and development of the country

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Role of entrepreneurs Employment and Income

Investment

Saving and Taxes

Cycle of growth & development

The Entrepreneur     

1. Mobilizer of Capital 2. Service Providers 3. Employers 4. Tax Payers 5. Suppliers of Products

Economic growth 

Process by which a nation's wealth increases over time. .

Measure of growth 

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GDP- gross domestic product. This measures the goods and services produced within the country

GNP measures the goods and services produced by Filipinos anywhere in the  world

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The rate of economic growth is influenced by 1. 2. 3. 4. 5.

natural resources human resources capital resources technological development in the economy & institutional structure and stability

THEORIES OF ECONOMIC DEVELOPMENT AND GROWTH

Known economists advocated different theories in trying to explain how countries can grow economically

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 Analysis of these theories will help us determine the importance and relevance of the different economic and non-economic factors of the growth and development of the economy of other nations particularly on ENTREPRENEURSHIP

1. LAISSEZ-FAIRE THEORY  

French word which means ECONOMIC FREEDOM  A Theory introduced by those who believed that government should not interfere in economic activities. 

Government should focus only on the areas of EDUCATION, JUSTICE AND PUBLIC WORKS

2. KEYNESIAN THEORY During economic depression – the government should put up massive labor projects and public  works that will generate large scale employment resulting to more income for the people.

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Proposed by John Maynard Keynes “The higher the income –  the higher is the consumption”

3. RICARDIAN THEORY  Advocated by David Ricardo, who believes that the key factor in economic growth is LAND. He believes that all  wealth comes from the Land.

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4. KALDOR THEORY 

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By Nicholas Kaldor – who stated that the key factor for development is TECHNOLOGY.  Application of modern technology in the production of goods and services has been responsible for the economic success of highly developed countries.

5. INNOVATION THEORY 

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By Economist Joseph Schumpter who believed that the key factors for economic development are the entrepreneurs or innovators. This is due to their courage, patience and determination to transform theory into practice or reality

6. Harrod-Domar Theory 

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Conceptualized by Sir Harrod of England and Prof. Domar of the United States. They believe that economic growth is made possible thru savings and physical capital, like MACHINES. Production becomes more efficient through the use of machines.

7. Non-Economic theories 

Other theories advocate that the key factors to economic growth are : 1. 2. 3. 4.

Political stability Democratic society Dedicated and efficient public administration Positive cultural Values

Max Webber 

Stated that values of thrift, industry and entrepreneurial spirit contributed to the economic growth of Protestant countries

Whatever! 

However, it is still up to the people and their government how they can apply all these theories in real situations to achieve economic growth

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Short quiz