The relationship between Entrepreneurship and Economic Growth Coursework

The relationship between Entrepreneurship and Economic Growth - Coursework Example In the modern business world, an entrepreneur can be defined by a number of definitions based on past empirical analytics & researches - an innovator, a leader, a manager, owner of an enterprise, coordinator of economic resources, resource manager, provider of capital, improvement of service levels, enhanced image of the economy on a global platter, and so on. But above all, fundamentally an entrepreneur is the person who has the guts to start and run a business as per the ideas generated by innovations. Entrepreneurs impact the local economies by increasing the diversity, invoking competition, creating jobs, managing social empowerment & practicing Change Agentry, increasing tax revenues, improving existing products & services, etc. and hence overall value adding to the economic performance, productivity and internationalization of the nation. A simple model of the relationship between entrepreneurship and economic growth is presented in the figure below (Figure 1): Figure 1: A simple model showing relationship between Entrepreneurship and Regional Economic Growth (Source: Gleave, Bill Dr. University of Essex. 2007) Entrepreneurs are expected to generate new ideas by virtue of innovations which may comprise of: 1 (a) Introduction of a new product (b) Introduction of a new technology (c) Introduction of a new methodology of production (d) Opening a new business potential & market in the region which has remained untouched largely (e) Discovery of a new source of supply of raw materials, support & services (f) Building a new organization system with innovative business model (g) Create new profit opportunities These opportunities lead to overall... An innovative entrepreneur is expected to possess high-risk appetite when starting a venture. Intelligent entrepreneurs clearly understand the correlation between risk & uncertainty which can be calculated by applying known probabilities and impacts. Knowing the dynamics, the entrepreneurs shall take calculated risks into account to bear the uncertainty of production & trade – the payoff is the profit earned by the entrepreneur which forms the primary motive anyway. A venture capitalist plays the role of trusting the risk appetite of an entrepreneur and funding him/her to help in transitioning the ideas into action thus forming good performing start-ups. A country having an effective framework of capitalists (Banks, Financial Institutions, Private lenders, etc.) ensures better development of entrepreneurship thus boosting the economic growth. This paper critically evaluates the correlation between Entrepreneurship and Economic Growth and the corresponding factors prevalent in the region influencing this relationship both on the positive as well as negative sides. Also, this paper intends to look at what measures of entrepreneurship are being used and discover whether the measures are appropriate. 4 Bosma, Neils and Harding, Rebecca. Global Entrepreneurship Monitor – 2006 Summary Report. Global Entrepreneurship Research Consortium (GERA). 2007. The subsequent section presents research question proposed herewith in order to establish a clear direction to the evaluation of literature and the corresponding data.