Globally, entrepreneurs have developed the dexterity in bringing together all the factors of production to produce goods and services. They convert ideas into business that drive production in free economies. What they produce and the services they provide become the bedrock of an economy. Job growth in the European Union and US was propelled by entrepreneurs.
In 2021, India had about 14.4% of its population between the ages of 18 – 64 years, starting or have started new entrepreneurial business. India is currently the third largest start-up ecosystem in the world after the US and China.
New jobs created between 1995 and 2020 in the US saw 62%, made up of start-up entrepreneurs. According to the US Small Business Association (SBA), entrepreneurs account for 44% of US economic activities. The pattern of economic growth via job and wealth creation depend on the rate of entrepreneurial activities.
In modern economies however, the role of entrepreneurs is still understudied and undervalued as the main driver for economic development. It is because economics is not well understood by the managers of an economy.
As posited by Per Bylund in his new book How to think about the Economy: A Primer, that “the task of an economist is not to predict the specifics of the future but to uncover the underlying processes that produce the economic outcomes that we observe”. Because economics is a process, it requires a deeper knowledge in the principles of free enterprise, property rights and culture of the society.
This is why Bylund further explains that, economics happens in the market and to understand economics for development, economists must appreciate the important role of entrepreneurs who drive production for prosperity. This calls for sound economics to understand the processes for economic development.
While economics to some extent deals with more assumptions and specific predictions into the future and not present, entrepreneurs create products and services for the present and future consumers. An economy cannot grow with economists without entrepreneurs. It then becomes imperative for economists to work closely with entrepreneurs to prioritize the factors of production in tandem with changes of preferences of a society.
Entrepreneurs determine the innovations for job creation. In most cases, entrepreneurs do not see job creation as an end but means to wealth creation. Per Bylund in this context, sees entrepreneurs as the main star of economic process of any economy.
In a free economic state, there are fewer regulations to spur innovations. The fewer regulations are made possible because the state recognizes entrepreneurs and businesses as the heart of the economy. It is time for economists to study entrepreneurial activities deeper than ever. Not limited to this, an important area which has little to no data for economic development is the study of the behavior of entrepreneurs by economists.
Since economics is a process, fiscal and monetary experts should consider to place premium on the dynamics and changes that come with entrepreneurial activities. Entrepreneurs determine prices on their products and services. Planning of the economy should be done with entrepreneurs and industry players to help states achieve the intents of their policies for economic growth.
Peter Bismark Kwofie
Institute for Liberty & Policy Innovation
He can be reached via: email@example.com
Photo credit: micropolis.com