By:Rajaram KshetriB. pharm, IOM

“Entrepreneurship is Cause but

Economic development is Effect”

Contents:What is Entrepreneurship?Role of Entrepreneurship in

economic developmentProblems and challenges of

entrepreneurship in NepalRole of government for small

business and entrepreneurshipWhat is EDP?

Entrepreneurship• It is the act of being an entrepreneur, which can be defined as-

"one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods".

The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions.

Entrepreneurs act as catalytic agents in the process of industrialization and economic growth.

Entrepreneurs:

Explore opportunitiesConvert ideas into viable business proposition

Provide new products and services to the society by bringing together and combining various factors of production.

Change life style of the people.

WHAT ENTREPRENEURS DO?

EMPLOYMENT & INCOME GENERATION

ENTERPRISES

ENTREPRENEURS

Taxes/Govt. Revenues

Poverty Alleviation

Higher Productivity & Innovations

Output & Exports

Wealth

Role of Entrepreneurship in economic development

(1) Promotes Capital Formation(2) Creates Large-Scale Employment

Opportunities(3) Contributed towards innovation and R & D(4) Promotes Balanced Regional Development(5) Reduces Concentration of Economic Power(6) Wealth Creation and Distribution(7) Increasing Gross National Product and Per

Capita Income(8)Improvement in the Standard of Living(9)Use of Local Resources(10) Preventing Industrial Slums

(1) Promotes Capital Formation

Entrepreneurs promote capital formation by mobilising the idle savings of public.

They employ their own as well as borrowed resources for setting up their enterprises.

Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.

(2) Creates Large-Scale Employment Opportunities

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations.

In a global scenario, 34 millions of fresh employment opportunities created by entrepreneurs from the period of 1980.

Entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.

3) Contributed towards innovations and R & D

Almost 2/3 % of all innovations are due to the entrepreneurs.

Technological progress alone cannot lead to economic development unless technological breakthroughs are put to economic use by entrepreneurs.

It is the entrepreneur who organizes and puts to use capital, labour and technology in the best possible manner for the setting up of his enterprise.

Eg:- on march 15, 2011 , the market cap of Apple company was $547.17 bn (now topped $600 bn) which is more than the GDP of Poland (merely $ 531.8 bn).

CNN point out that Belgium, Sweden, Saudi Arabia & Taiwan are each worth less than Apple’s market cap.

(4) Promotes Balanced Regional Development

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development.

They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement.

Hence import substitution and export promotion ensure economic independence and development.

(5) Reduces Concentration of Economic Power

Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies.

In order to address this problem, a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.

(6) Wealth Creation and Distribution

It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society.

Entrepreneurial activities also generate more activities and give a multiplier effect in the economy.

(7) Increasing Gross National Product and Per Capita Income

Entrepreneurship help increasing gross national product as well as per capita income of the people in a country.

Increase in gross national product and per capita income of the people in a country, is a sign of economic growth.

(8) Improvement in the Standard of Living

Entrepreneurship play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale at a lower cost.

This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.

(9) Use of Local Resources

Entrepreneurs proper use the resources which can result in the progress or development of that area and creating the local employment too.

(10) Preventing Industrial Slums

Industrially developed areas are faced with problem of industrial slums, which result in over burdening of civic amenities and adverse impact on the health of people.

Dispersal of industries can help in the overcoming of this grave problem.

Support to entrepreneurs for setting up their enterprises in industrially backward areas. This will also help in reducing pollution and overtaxing of civic amenities.

Problems and challenges of entrepreneurship in Nepal

Because…….Limited financial resources Lack of proper entrepreneurial

education and training facilities Low rate of return from industrial

investment Conservative lending policy of banks

and financial institutions Lack of adequate protection to investors Unstable and unsuitable economic and

industrial policies of the government

Wide-spread corruption in the public sector and the aspiration of many people in the private sector to be rich overnight instead of putting efforts to the industrial development

Political instability [Dr. Fatta Bahadur K.C( Reader, Nepal Commerce

Campus, Tribhuvan University, Kathmandu.) , 1989 & 2003].

Role of government for small business and entrepreneurship

Creation of investment-friendly climate

Provision of Adequate Capital:- It is essential to provide adequate financial facilities

especially to meet the fixed and working capital requirements of the concerned industries. So, the lending policy of Development banks, Commercial banks and other financial institutions should follow more liberal and practical policies. Similarly, procedural simplification is required while investing in productive sector.

Protection to the Investors :- It is especially important to provide adequate protection to

the industrial investors. Most industries have failed to protect their industry from the competition of foreign products. Now Government should adopt an appropriate and realistic policy to protect and develop industries within the country.

Suitable Government Policy:- Only clear and consistent economic and industrial

policy can help to induce entrepreneurs. Government should formulate clear, liberal and attractive economic and industrial policies.

Expansion of Institutional Services :- The adequate institutional services are required to

encourage entrepreneurs. The concerned agencies, both the financial and development institutions should be directly involved to encourage potential investors for investing their funds in productive sectors. NPEDC (National Productivity and Economic Development Centre) should launch appropriate Entrepreneurship development program (EDP).

What is EDP?????Starting a small business can be challenging. So,

Entrepreneurs and small business owners are faced with many hurdles and sometimes don’t have the resources they need to help them make tough decisions. Thus this program prove to be effective for small business owners in such situations.

An Entrepreneurship Development Program (EDP), of 6-8 weeks duration, aims at training the Graduates and the Diploma holders in the essentials of conceiving, planning, initiating and launching an economic activity or an enterprise successfully.

The program content includes class room training on essentials of entrepreneurship survey of the prevalent socio - economic scenario, identification of business opportunities, role and function as well as schemes of assistance offered by various constituents of the support system.