The entrepreneur is the most important person who organizes the production process in the business. Other than this function, all other resources such as land, labor, and capital are not used effectively. These resources are not able to invent any product without the guidance of the entrepreneur. The entrepreneur gives shape to other resources that exist in nature. Otherwise, these available resources can not invent any innovation on their own. So it is said that absence of entrepreneur intervention, every plant would remain a weed and every mineral would remain a rock. It is not only important for the business but also for the economic development because the entrepreneur is the key who uses their mind for creativity and generating income for the survival of own and contributes to the national income also. There are lots of functions that are performed by the entrepreneur for economic development. Let us discuss them one by one.
Contribution to gross domestic product
The entrepreneur increases the gross domestic product of the nation. The GDP is the most important factor for economic development. Businesses are the sources that generate income for the economy as well as themselves as production. Organizations can produce goods and services by using many resources. As we know income generated is distributed among the factor of production where the land gets rent, labor gets wages and salaries, capital gets its interest and residual income accrues to the entrepreneur in the form of profit. The rental income is generated by those who have the land and capital respectively whereas larger masses are destined to earn their income via wage employment. The biggest income generated by the entrepreneur is investing the large capital and generating employment for the other. This is the most important way that grabs attention as a function performed by the entrepreneur.
The entrepreneur can take decision ability that helps to maintain capital formation. Entrepreneurs can decide on the investment of capital in the right way for production and other investment that will help generate income. Gross domestic production and capital formation are related to each other by the capital-output ratio. The capital-output ratio is calculated on production and capital. The capital-output ratio is the tool for measuring the capital increment for example if we have savings and we invest in a friend's business then that contributes to the process of capital formation. Almost every business raised funds from the banks, financial institutions, and capital markets the maintain the cash flow along with providing more services to citizens.
Generating employment opportunity
Every business gives opportunities to people for employment with different abilities, qualifications, and skills. The entrepreneur became the source of the generating employment opportunity for people who do not have land for rental income and interest on the capital. People earn money from this employment for maintaining their live hood and lifestyle for their satisfaction. An entrepreneur is a source that is related directly and indirectly to the people employing them.
Generate another business opportunity for other people
Every business creates room for other businesses because of the reaching audience's process there are several businesses includes. The new business gives chance to other suppliers to provide information and the marketers of the output. As we business are related to each other for example a manufacturing company is related to another business that provides material for the manufacturing business and the manufacturing business provides products to a wholesaler, and the wholesaler business is related to the retailer, this chain creates the business opportunity for others also. These immediate linkages induce further links also and crate several business lines for the other people.
Improvement in economic efficiency and activities
Efficiency refers to having generated output from the same input. Entrepreneurs improve economic efficiency by adopting an innovative process of production and reducing wastage and increasing profits.
On other hand, technological development is very important for an improved product. Id the business higher ability labor that will also help increase in the production for business and they provide their best services to them for the improvement of the production process.
Increase the scope of economic activities
Development does not only related to more and better services provided. It also means the diversification of the economic activities at the geographical level. As we know there are several undeveloped nations are playing very important roles in diversification because they can be in good demand as well supply side. Economic activities balance the demand and supply, because business is trying to meet the demand of consumers, and supply is important for completing the demand.
On the other hand, liberalization is allow businesses to break the border briar. Entrepreneurs are using different technology the increasing the productivity of the nation and they use local resources and over sea resources as well.
The other point is, that entrepreneur leads the process of economic development by bringing about sectoral changes. People must be aware that as economy growing rather than agriculture. Businesses are promoting renewable energy more than limited resources for the production of goods and services.