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

Entrepreneurship
4 Aspects:

The process of creating something new with

value By devoting the necessary time and effort Assuming the necessary risk and Getting the rewards

4 ASPECTS
1. CREATION OF SOMETHING OF VALUE

PRODUCTS AND SERVICES THAT CAN BE SOLD FOR A PRICE

 2. DEVOTION OF TIME - towards the attainment of

personal goals: PROFIT PRODUCE GOODS & SERVICES FOR THE COMMUNITY PROVIDE EMPLOYMENT PROVIDE INCOME

 3. Assumption of risk

the possibility of failure and losing whatever they put in

 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

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
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

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

 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.
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.

4. KALDOR THEORY
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
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
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

 Short quiz