The entrepreneurship affect on the economy Essay

The entrepreneurship affect on the economy - Essay Example This paper discusses the effect of entrepreneurship on economic development. Background of Entrepreneurship An entrepreneur was described by Jean-Baptiste Say, a 19th century French economist, as an individual who moves economic resources from low productivity and yield areas to areas with increased yield and productivity (Bridge et al, 2009). Joseph Schumpeter expounded on this concept a century later by identifying the force needed to drive progress of the economy in entrepreneurs. In the absence of this force inherent in entrepreneurs, economies would become subject to decay, structurally immobilized, and static. The entrepreneurial spirit identifies an opportunity, be it a business, service, or product, and organizes a venture for its implementation. Schumpeter argued that successful entrepreneurship sets off a chain of events that encourages other entrepreneurs to work on innovation and propagate it to â€Å"creative destruction†, which involves rendering of existing busi ness models, services and products obsolete in favor of the innovation (World bank, 2011). Schumpeter cast the entrepreneur as both a generative and disruptive force (Steyaert & Hjorth, 2009). He cast the entrepreneur as an agent of economic change. ... However, theorists agree that entrepreneurship is tied to opportunity. Entrepreneurship plays a vital responsibility in the economic development of a country since the entrepreneur is the prime mover of innovation (Zhang, 2009). The Role of Entrepreneurship in Economic Development Entrepreneurship plays various roles in the development of a country’s economy. First, it allows for the effective use of resources (Audretsch et al, 2012). Entrepreneurship involves making use of resources considered to be, of low value, to earn an income. Entrepreneurs conceive ideas of how to utilize what others consider waste. This creates jobs and increases taxes, which, in turn, improves the beneficiaries’ standard of living. Since the measure of economic growth is an increase in income that is sustained over time, entrepreneurs increase the per capita income via identification and establishment of profitable ventures. Entrepreneurship also leads to development of infrastructural facilit ies such as factories, buildings, bridges, roads, and communication networks (Audretsch, 2010). These are the vital components of economic growth. When Steve Jobs and Wozniak came up with the PC, they created a completely new variant of computer infrastructure. They shattered the computer user’s mainframe dependence and shifted control to the desktop. Once the users saw the new technology, they embraced Apple, as well as the other competitors who also joined in. In a relatively short time, Steve Jobs had created a completely new ecosystem with numerous software, hardware and peripheral suppliers. Because of the new ecosystem, Apple might have exited the market after a couple of years without causing any destabilization. The new equilibrium was not dependent on the formation of one