Roles of Entrepreneurship in National Development

 Roles of Entrepreneurship in National Development
Roles of Entrepreneurship in National Development

Entrepreneurship activity and new firm formation are unquestionably considered engines of economic growth and innovation. As such, they are among the ultimate determinants of the large regional differences in economic performance. The importance of new firm formation for growth has been recognized. According to global entrepreneurship monitor report in 2000, about 70% of an area’s economic performance is dependent upon how entrepreneurial the area’s economy is.

Entrepreneurship orientation in rural areas is based on stimulating local entrepreneurial talent and subsequent growth of indigenous companies. This in turn would create jobs add economic values to a region, and at the same time it will keep scare resources within the community. To accelerate economic development in rural areas, it is necessary to build up the critical mass of first generation entrepreneurs.

Studies conducted by Economic Commission for Latin America and   Caribbean (ECLAC) and Food Agricultural organization (FAO) in the Latin American and Caribbean region have indicated that rural enterprises can be an important modernizing agent for small agriculture. Government has supported this process by creating incentives for Agro-industry to invest in such regions. This has not only been in developing countries, but it has also been a clear policy of the European Union (EU) which channels a large part of the total common budget to develop the backward and poor regions of Europe.

Development  echoes the prospects of small- enterprise framework as  a possible rural development strategy for economically disadvantaged communities and provides this description of the nature of small-scale flexibly specialized firms: “First, these businesses would provide products for local consumption that are not readily available in the mass market. Second, small-scale technically sophisticated enterprises would be able to fill the niche markets in the national economy that are too small for mass producers. Thirds, small crafted-based flexibly specialized enterprises can alter production quickly to exploit changing market conditions.”

According to study conducted in the United State it has been found that rural poverty has become as intense as that found in the inner cities, and has stubbornly resisted a variety of attempts at mitigations through economic development policies. The latest strategy for addressing this problem is the encouragement of emerging “home-grown” enterprise in rural communities.

The expectations is that these new ventures:

(a) Will provide jobs or at least self-employment;

(b) Will remain in the areas where they were spawned as they grow

(c) Will export their goods and services outside the community, attracting much- needed income.

In a study on the importance of SME development in rural employment in Egypt, have suggested that SMEs are traditionally thought of as well poised to respond to increased demand by creating jobs.

It is important to stress here that rural entrepreneurship in its substance does not differ from entrepreneurship in urban areas. Entrepreneurship in rural areas is finding a unique blend of resources, either inside or outside of agriculture. The economic goals of an enterprise and the social goals of rural development are more strongly interlinked than in urban areas. For this reason entrepreneurship in rural areas is usually community based, has strong extended family linkages and a relatively large impact on a rural community.

Policy Implication for National Entrepreneurship

Studies have shown that SMEs in rural areas in the UK (particularly remote rural areas) have outperformed their urban counterparts in terms of employment. Behind each of the success stories of rural entrepreneurship there is usually some sort of institutional support. In a study in West Sichuan highlights the important factors responsible for the rapid development of enterprise in the area. These include uniqueness of the products in so far as they are based on mountain- specific, local natural resources; development of infrastructure; strong integrated policy support from government; and a well-planned marketing strategy and link-up with larger companies and organizations for marketing nation-wide and abroad.

The creation of such an environment starts at the national level with the foundation policies foe macro-environment stability and for well-defined property rights as well as international orientation. The policies and programs targeted specially to the development of entrepreneurship do not differ much respect to location. In order to realize their entrepreneurial ideas or to grow and sustain in business, they all need access to capital, labour, markets and good management skills. What differs is the availability of markets for other inputs.

The inputs into entrepreneurial process-capital, management, technology, building, communications and transportation infrastructure, distribution channels and skilled labour, tend to be easier to find in urban areas. Professional advice is also hard to come by. Consequently, entrepreneurial behavior, which essentially the ability to spot unconventional market opportunities, is most lacking in those rural areas where it is most needed i.e. where the scarcity of these inputs’ is the highest.

Rural entrepreneurship is more likely to flourish in those rural areas where the two approaches to rural development, the ‘bottom up’ and the ‘top down’ complement each other. The ’top down approach gains effectiveness when it is tailored to the local environment that is intends to support. The second prerequisite for the success of rural entrepreneurship, the ‘bottom up’ approach is that, ownership of the initiative remains in the hands of members of the local community. The regional development agencies that fit both criteria can contribute much in rural development through entrepreneurship. This is also the case in Nigeria.                         

The National Spatial Strategy (NNS), the national planning framework for Ireland for the next 20 years (2002-2020), recognizes the importance of making the most of cities, towns and rural places to bring a better spread of opportunities and a better quality of life. It advocates the following features as appropriate rural enterprise policy element:

1)     The nature of the enterprise encouraged to locate in rural areas must be appropriate to those areas in economic, social and environmental terms, e.g., location of overly large enterprises in rural areas should properly be avoided;

2)     Enterprise policies must be flexible to facilitate local circumstances rather than being rigid national ones;

3)     Policy towards enterprise must involve features which go beyond the bounds of traditional enterprise policy, e.g. in relation to social infrastructure to attract the necessary workforce;

4)     Policies in relation to enterprise in rural area and in smaller towns should be seen as an integrated package. There must also be flexibility in relation to how smaller towns’ enterprise functions are perceived. These vary depending in the nature of the area;

5)     Policy towards rural enterprise should encompass all rural enterprise and not just traditionally grant-aid able manufacturer, i.e. in a rural context any rural enterprise is in principle equally desirable;

6)     There is a need to focus on new rural enterprises other than tourism. There is a danger that an overly heavy burden in terms of expectation is being placed on the shoulder of rural tourism as the only viable alternative to farming;

7)     There will need to be consistency and co-ordination regarding the choice of rural enterprise locations among the various bodies involved rather than each having its own unilaterally chosen list.

It reveals that firms that demonstrated the highest level of innovative behavior were growing in terms of sales and also generating employment, although it is important to stress that the relationship between innovation and growth is an inter-dependent and mutually reinforcing one, rather than a simple cause and effect relationship.

Organization for Economic Cooperation and Development’s (OECD) (1999) work on government policy for enterprise development advocates best practices in four broad areas related to SMEs. These practices are appropriate for both agro industries and other rural enterprises. Specifically, OECD advocates facilitating:

Ø   Efficient and unbiased financial markets for SMEs.

Ø   A suitable business environment for SMEs

Ø   Education, training and the capability of SMEs to compete; and

Ø   Access to information, networking and the global marketplace for SMEs.

To summarize, Pretrin (1994) maintains that policy implications for rural entrepreneurship development can be:

1)    Sound national economic policy with respect to agriculture, including recognition of the vital contribution of entrepreneurship to rural economic development;

2)    Policies and special programs for the development and channeling of entrepreneurial talents;

3)    Entrepreneurship thinking about rural development, not only by farmers but also by everyone and every rural development organization;

What is needed in Jamaica to ensure that economic benefits the majority of people in the society, by consistency raising the income level of this majority is social entrepreneurship. Social entrepreneurship is that which is not aimed solely at profit, but a private gain which has a social benefit. This genre of entrepreneur includes the purely charitable, non-government organization, cooperation and the purely commercial. The distinguish feature is that their calculus of gain is not solely private profit but gain that is societal in its scope and aims.

Across the world there are myriad hybrid organizations that have their origin in social entrepreneurship and which create that blends economic, social and environmental dimensional. Entrepreneur, employees and customers shared the benefits of the enterprise which have found innovative activities, products and services.

Some of this always taken place in Nigeria, but not differ not on a sufficient scale to coalesce into a critical mass that could make a significant impact on economic development. Social entrepreneurship on a large scale can re-orient Nigeria to a path of economic development by the proliferation of social entrepreneur sharing common perspective and targeted interventions.

Social entrepreneurs can be the catalyst for a more humane capitalist economy in Jamaica because they live the Christian ethic “to give is to receive” and their praxis is to “gain in a way that as many others benefits”. Entrepreneurship would be truly integrated into the mainstream of Nigerian culture because it would benefit workers and the surrounding society yielding tangible beneficial returns across the entire society.

Their activity would make for a society in which the citizens are economic stakeholders and remove from entrepreneurship in all its forms the accusation of self-interested gain exploitation of others. Social entrepreneurship has the potential to creating a more humane and developmental type of capitalism to the varieties that have prevailed in Nigeria. it is possible to realize the goals of socialism without the selfishness.

Social entrepreneurship can create in a state an entrepreneur-led, market-operated economy embedded in a social consciousness  of shared  gain for the majority of the populace. 

Also read on: 

<<Entrepreneurship and National Development in the state>>


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