Entrepreneurships play an important role in the economic growth of a

country. Critically evaluate this statement and illustrate with examples.

I/ INTRODUCTION:
Economic growth is an essential part which can determine the competitiveness and progress not
only on a society level but also on the standards of living in each country. It is a function which
includes various different factors from each nation such as climate type, level of education,
industrialized rate, GDP, and technology. However, there is one more important factor which
nobody can deny the huge impact of it on economic growth: entrepreneurship. It seems like
entrepreneurship is ‘at the heart of national advantage’ (Porter, 1990, p. 125). Since economies
continue to integrate due to globalisation, entrepreneurship is on an upwards trend. This essay
will identify and discuss the three main benefits afforded to an economy through entrepreneurs
and entrepreneurship and between them are some minor negative effects. The first advantage of
entrepreneurships is to reduce the unemployment rate. The second advantage is that
entrepreneurships will lead to many innovations for the economy. And the last advantage is
about new markets which are created by entrepreneurships.

II/ BODY:
Paragraph 1:
To begin with, unemployment is one of the most serious and prickle issues which many
economies around the world are facing with. It is believed that entrepreneurship will be the
greatest weapon to counteract this issue. As the number of enterprises grow, it will creates more
jobs for people in direct or even indirect ways. It can be easily understood that an entrepreneur
can create jobs directly due to self-employment and indirectly by opening new companies it
means more staff will be needed. For example, imagine that if hundred people start as
entrepreneurs, they not only create jobs for themselves but also provide jobs for other hundred
more people. Audretsch and Thurik (2000) also present a piece of empirical evidence to prove
that wherever there is an increase in the number of business owners, the unemployment rate of
that place will decrease. According to Markinblog (2020), in the United States, which is one of
the most developed country in the world, there are about 15 million Americans all full time self-
employed and they has employed 60.6 millions people. In this way, entrepreneurs play an
effective role in clearing the path for the growth of economy in one nation. The example about
Sri Tony Fernandes, who is the founder of AirAsia, has drawn worldwide attention. He is one of
the most successful entrepreneurs who contributed to his country's economic development–
Malaysia by providing jobs to employees. He has owned around 17, 000 employees since 2016.
However, as the proverb goes “Every coin has its two sides” and this issue is no exception. Some
may argue that when there are more and more companies founded, it will be synonymous with
the higher level of capital investment needed. As some businesses require a lot of money to get
started, so more new entrepreneurs mean more debt costs in the economy. Nevertheless, it just
often appears in the beginning stage of an organization, and these investments are totally
balanced because after the entrepreneurs get profits, the investors will also have some benefits
too.

Paragraph 2:
Another striking function of entrepreneurs in economic progress is that it can lead to various
innovations. Harbison (1965) consists of entrepreneurs is among one of the greatest motivators
for innovations. The main reason why innovation is important for the economic development is
because through it many inventions which are required by the society nowadays will appear. As 
Schumpeter (1934) stated, an entrepreneur is defined as an individual or a group who is able to
find out and apply new methods to invent something new or to do old things but in a new
way. Imagine that without innovation, it has the same meaning with no new things, and without
anything new, there will be no progress in any organization. And moreover, the most
contribution when saying innovation can spark the economy development is that as the definition
above, innovations mean generating some new methods or services to help to boost the
productivity, so a company can produce a bigger number of products. By this way
entrepreneurship can not only make fortune for entrepreneurs but also seen as one of most
efficient movers for the growth of an economy (Hisrich, et al. 2010). Without doubt,
contemporary life of humans is all run by innovations. The common instance for this type of
entrepreneurship is about Netflix. So Netflix came out to society and did a good job as an
alternative for cinemas and also brick-and-mortar DVD rental stores. The brand reinvented the
delivery of DVDs in a modern way and transformed movie rental altogether with streaming
service too. For these functions, they can inevitably explain the success of Netflix. It can be said
that through the release of Netflix, the door for innovations in home-entertainment is opened. In
2019, the company’s annual revenue amounted to over 20 billion U.S. dollars, continuing the
impressive year-on-year growth Netflix has enjoyed over the last decade. On the other hand,
many people argue that not all innovations will be successful and good for human life as the old
saying goes: “Pioneers take the arrows, settlers take the land”. Some new goods may be time-
consuming to produce or have poor quality, so they will not help much for economic growth.
Nevertheless, to refute this argument, the changes we dread most may contain our salvation.
Although sometimes innovative products are not positively reviewed by customers, more
innovations mean more competitiveness level among businesses existing. And this phenomenon
will not only can fulfill the customers demands but also can boost the economy growth when the
productivity is higher.

Last but not least, one more positive influence of entrepreneurship on an economy that couldn’t
be denied is the rise of new markets when level of competitiveness is boosted. Because the
domestic markets will not be enough for all new companies so entrepreneurs maybe driven to
seek new markets for their products and services. These markets can not only be in the domestic
sphere but also can be outside the national’s frontier. Thus this mode will bring a nation with
foreign revenue and increase the prosperity of the economy as a whole. Besides that, local
communities will have a chance to export their local products to global markets. And when it
comes true, the productions of that country or even the reputation will be widely recognized in
international level. This type of entrepreneurship can be utilized as a tool to enhance the global
collaboration (Stuart Holliday, 2019). There are many examples to illustrate for this success of
entrepreneurs, but the most well-known maybe about the founder of Alibaba company, Jack Ma.
He and his team had cooperate to found Alibaba.com, which was a leading platform for
worldwide wholesale trade in 1999. Just needing 4 years, in May 2003, it became the China’s
largest online shopping destination. Aside from its domestic commerce popularity which is fully-
recovered, Alibaba’s international commerce retail revenue also increase around 26% year-over-
year to reach at $992 million, according to its latest earnings report. Nowadays, Alibaba has
expanded its market to many places all over the world like Korea, Malaysia, Hong Kong, etc.
But there are some people strongly suppose that when there are more and more new businesses it
will cause the phenomenon of market saturation. If in the marketplace, there are so many same
types of products but were put under different brands, customers will confuse which one they
should choose. However the bright side of such a phenomenon is that it causes all the players in
the market to re-evaluate their operational capabilities, increase value addition, lower costs and
become more efficient. This will lead to the economy of a nation becoming more dynamic.

III/ CONCLUSION:
To sum up, based on everything that has been discussed above it is apparent that the positive
impacts of entrepreneurs on an economy far outweigh the negative impacts. It can not be denied
that entrepreneurs play a crucial role in forming a dynamic economy and an engine of economic
growth. The helpful level of entrepreneurship in economic development varies from economy to
economy depending upon its material resources, industrial climate and the responsiveness of the
political system to the entrepreneurial function. However, it shares some same factors when
playing as a role to help to create employment opportunities not for themselves but for others as
well, lead to many innovations and open new markets for the business world. These benefits will
strongly influence a country’s economic performance. Entrepreneurs are exactly the nation
builders so each countries should learn to value their entrepreneurs, as real partners of economic
development.

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REFERENCES:
1. Holliday, S. (2019). Entrepreneurship is the New Engine of Global Collaboration.
Retrived from https://www.entrepreneur.com/article/325800
2. Porter, Michael E. (1990). The Competitive Advantage of Nations. New York: Free
Press.
3. Audretsch, David B. and A. Roy Thurik, 2000, Capitalism and Democracy in the 21st
Century: from the Managed to the Entrepreneurial Economy, Journal of Evolutionary
Economics 10, 17-34.
4. Kiniulis, M. (2020, November 26). 11 Entrepreneur Statistics, Facts, And Trends in 2020.
Retrieved December 12, 2020, from https://www.markinblog.com/entrepreneur-statistics/
5. Schumpeter, J.A (1934,1980), The Theory of Economic Development. Oxford University
Press: London.
6. F. Harbison, "The Prime Movers of Innovation," Education and Economic
Development, eds. C. Anderson and M. J. Bowman (Chicago: Aldine Co., 1965)
235.
7. Hisrich, R.D., Peters, M.P. and Shepherd, D.A. (eds)
(2010), Entrepreneurship, 8th edn, McGraw-Hill/Irwin, New York, NY.
8.