Lecture 2 - Economic Contributions by Entrepreneurs 07.01.2016

7/24/2019 Lecture 2 - Economic Contributions by Entrepreneurs 07.01.2016

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F o u n d a t i o n s o f E n t r e p r e n e u r s h i p

Foundations of

Entrepreneurship

Economic contributions (and

other value creation) of anenterprise and entrepreneurs


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Books

Entrepreneurship by Robert D.Hisrich

Entrepreneurship: Theory,Process, and Practice 9th Editionby Donald F. Kuratko


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Economic contributions of anenterprise and entrepreneurs

How does an economy prosper?

hat roles do entrepreneurs play inecono!y"

Where does a government get the moneyfrom?

Ho# a nation creates #ealth"

What are roles of the corporate world inthe process of creation of wealth?

hat is e$ciency of !oney"


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ltimate !b"ective of anEconomy

#o gain $Full employment% & there isenough overall demand in theeconomy for everyone who wants a

"ob to have one at the prevalentsalary'


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Wealth reation for the ation

%da! &!ith: The Wealth of Nations' Firstpublished in *++, - inspired by the industrialrevolution' the division of labour. productivity. and free markets

'ohn (aynard Keynes: The )eneral Theoryof E!ploy!ent, *nterest and (oney -published in *01, consumption function. the multiplier (* 2upee of

investment creates income of several 2upees). the

marginal e3ciency of capital. the principle of e4ectivedemand and li5uidity preference'

'oseph &chu!peter + reative 6estruction as away of innovation and entrepreneurship and economic

growth


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7iterature 8ubstantiating Economic9rowth 6riven by Entrepreneurship

8tel :' v. ;' arree and 2' #hurik (). The eect ofentrepreneurial activity on national economic growth.8mall Business Economics. ol'


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ountry E6B 9E A9 G78witerla

nd ++ ,0>+1* @+=1* *


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orrelation oe3cients

Ease ofDoin-usiness

)lobalEnt. *nde

Per+/apita)DP

9lobalEntrepreneurshipndeK

0.1023

='====

Aer&apita 96A 0.3422 0.3334

='==== ='====

Guality of 7ife ndeK 0.3546 0.1733 0.3600

='==== ='==== ='====


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LEase of 6oing BusinessM andL9lobal Entrepreneurship ndeKM

20

4

0

60

80

100

Glob

alEntrepreneurshipIndex

40 50 60 70 80 90Ease of oin! "usiness Index


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L9lobal Entrepreneurship ndeKMand LAer&apita 96AM

0

20

40

60

80

G

lobalEntrepreneu

rship

Index

0 20000 40000 60000 80000#er $apital G#


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L9lobal Entrepreneurship ndeKM andLGuality of 7ife ndeKM

0

20

40

60

80

G

lobalEntrepreneu

rship

Index

0 50 100 150 200%ualit& of 'ife Index


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F d i f E h i


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F d t i f E t h i


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Full Employment

httpNOOen'wikipedia'orgOwikiOFullPemployment

F d t i f E t h i


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(onditionsdeQn

ingtheEntrepreneurialF

ramework

F d t i f E t h i


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Jeynesian Economics

onsumption function#otal consumption R :utonomous

consumption S nduced consumption

(ultiplier Arivate or government investments bring

cycle of spending that increasesemployment and prosperity' 2s' *== spentin labor cost of a pro"ect leads to 2s' =eKpenditure that leads to 2s' ,@ and so onleading up to aggregate 2s' >== or so'



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Jeynesian Economics

#he principle of e4ective demand andli5uidity preference'

8avingsonsumptionnterest rate

Employment increases with consumption' onsumption depends on savings' 8avings is inTuenced by interest rate



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alue reation Arocess

2etaile

r/onsu!pti

on

6istributio

n hannel

;anufacturing

or

8ervice

ompany

Arimary

nputs

;akers

tilities

Proide rouhly

32 of the fund

Banks

and

Financial

nstitution

s



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&ains #ith the -ankin&yste!


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;alue %round a (anufacturin


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Purchasin Po#er of Rupee

EKchang

e 2ate

EKport

2epatriatio

n

FO2OF6

mport

;ovement of Foreign urrency



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8ources of 9overnment 2evenues


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#aK omposition>@

8ervice #aK *.=.*@*

#aKes on #

)rand Total ?4,72,130

/o!position of Taes ncome #aK

Wealth #aK

ustoms

EKcise 6uties

8ervice #aK

#aKes on #



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* ant you to appreciate thesini@cance of the follo#ins in

econo!ic deelop!ent:

onsumption

Employment

#echnology Aurchasing power of domestic

currency

2ead more onthis



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Role of *nnoation in&ti!ulatin Econo!y

#he key factor for increasingconsumption is employment thatagain is dependent on consumption'

ew products and e3cientmanufacturing processes tend tobreak the e5uilibrium and shift it to

new paradigm'

2ead more on

this



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Econo!ic /ontributions ofEntrepreneurs

Entrepreneurs

Bring about the economic value&cycle andsustain it'

ncrease government income resulting in highereKpenditure and more consumption'

9enerate employment'

Aromote savings'

ncrease consumption'

8timulate new demand by o4ering products ofhigher esteem'

2ead more on



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Econo!ic /ontributions ofEntrepreneurs contd..

mprove technological landscapethrough innovations in all key areas'

Facilitate di4usion of technologiesfrom abroad into domestic industriesresulting in technological self&reliance'

Bring foreign eKchange'

mprove 5uality of life'



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p p

8:



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p p



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p p

Funsta

4

Lecture 2 - Economic Contributions by Entrepreneurs 07.01.2016

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Transcript of Lecture 2 - Economic Contributions by Entrepreneurs 07.01.2016