ROLE OF ENTERPRENURE IN DEVELOPING AND DEVELOPED

COUNTRIES. BASCIALLY DISCUSSED IN PAKISTAN

(ASSIGNMENT # 2----------------SEMESTER FALL-2019)

SUBMISSION DATE (MAY 01 ,2019)

BY

Alia……(188682686…)

COURSE TITLE

Diversity of Plants and Related Life

COURSE CODE

BOT-101

SUBMITTED TO

Miss …..

DGREE PROGRAM/SECTION

BS STATS -2nd

DEPARTMENT OF STATISTICS

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Contents
Introduction ..............................................................................................................................................................3
What is entrepreneurship?........................................................................................................................................3
The personal characteristics of the entrepreneur ....................................................................................................4
The post-entry performances of entrepreneurial firms ...........................................................................................4
Entrepreneurial learning, market failures and institutional ....................................................................................4
Innovation is the way forward ..................................................................................................................................4
Employment Generation ..........................................................................................................................................5
Promotes Capital Formation ...................................................................................................................................5
Small Business Plan Dynamism ..............................................................................................................................5
Balanced Economic Development ...........................................................................................................................5
Innovations in Enterprises .......................................................................................................................................5
Better standards of living.........................................................................................................................................6
Self-Reliance..............................................................................................................................................................6
Facilitates Overall Development .............................................................................................................................6
Entrepreneurship in Pakistan .................................................................................................................................6

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Introduction
The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth
and development. Entrepreneurship is one of the most important input in the economic development of a country.
The nature of a developing economy is quite different from a developed economy. The developing economy can be
an agricultural country moving towards the industrialization or it may be the one where in the industry may be in
its infancy lacking advance technology.
The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and
fast developing communication technology. The globalization of industry and commerce is bringing a vast change
in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. The modern era is an era of
changes. The whole world is becoming a village due to the industrial revolution and fast developing communication
technology. The globalization of industry and commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. Economic development is a
highly dynamic process characterized by the pattern of demand shifts, new products are needed, appear for the
production of goods within a country.
A developing country needs entrepreneurs who are competent to perceive new opportunities and are willing to incur
the necessary risk in exploiting them. A developing economy is required to be brought out of the vicious circle of
low income and poverty. Entrepreneur can break this vicious circle. Entrepreneurs and helping government can
change a developing economy in developed economy.
In recent years a strong belief that ‘entrepreneurship’ is a crucial driver of economic growth for both developed and
developing nations has emerged among both scholars and policy makers (see, for instance Audretsch, Keilbach and
Lehmann, 2006 and, for a comprehensive survey, Van Praag and Versloot, 2007). However, moving from
macroeconomic scenarios to the micro foundations of entrepreneurship, since the seminal contribution by Baumol
(1990) we have known that ‘Shumpeterian innovative entrepreneurs’ coexist with ‘defensive and necessity
entrepreneurs’, the latter being those who enter a new business not because of market opportunities and innovative
ideas, but merely because they need an income to survive. For obvious reasons, this kind of ‘survival-driven’ self-
employment is particularly diffused in the Developing Countries (DCs) (see Naudé, 2009 and 2010), where poverty
and lack of formal opportunities in the wage sector often push a large number of people into ‘entrepreneurial’
activities ranging from street vending to traditional and personal services (in most cases within the informal sector
of the economy

What is entrepreneurship?
According to Schumpeter (1934), entrepreneurship is a driving force of innovation, and more generally an engine
for economic development. Indeed, while endogenous growth theorists (see Lucas, 1988; Romer, 1986 and 1990;
Grossman and Helpman, 1991; Aghion and Howitt, 1997) highlighted the importance of human capital and R&D
as additional explanations for increasing returns in the aggregate production function, more recently several scholars
have proposed entrepreneurship as a third driver of economic growth. According to this hypothesis, entrepreneurs,
through their new companies, are able to exploit the opportunities provided by new knowledge and ideas that are
not fully
understood and commercialized by the mature incumbent firms (see Acs et al., 2005; Carree and Thurik (2006);
Audretsch, Keilbach and Lehmann, 2006; Braunerhjelm et al. 2010). Thus, according to these authors
entrepreneurship represents the missing link between investment in new knowledge and economic development,

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serving as a conduit for both entirely new knowledge and knowledge spillovers (see Carlsson et al., 2009; Audretsch
and Keilbach, 2011; for a very recent comprehensive survey based on this view, see Braunerhjelm, 2011). However,
before continuing, the question of what is intended by entrepreneurship and how it can be measured needs to be
addressed.

The personal characteristics of the entrepreneur

New firm founders differ with regard to characteristics such as previous work experience, family tradition, financial
status, personal motivation. To start with, the founder of a new firm is heavily influenced by his/her own
background, with particular reference to his/her previous job experience; as already discussed in the previous
section, on the one hand the importance of previous job experience explains sectoral inertia in entrepreneurship,
while on the other the loss of (or the fear of losing) the previous job may trigger the start-up of a new business as
an ‘escape from unemployment’

The post-entry performances of entrepreneurial firms

Since entrepreneurs are driven by both progressive and regressive determinants and are intrinsically heterogeneous,
the post-entry performance of newborn firms and their eventual contribution to economic development may be very
diverse as well. In what follows, after a theoretical discussion dealing with the macroeconomic constraints to new
firms’ growth (Section 4.1), we survey those empirical microeconomic studies which have shown how different
‘genetic’ characteristics may affect the post-entry performance of newborn firms

Entrepreneurial learning, market failures and institutional

From a theoretical point of view, Lucas (1978) was the first to put forward a theory of the size distribution of firms
based on the relative endowment of entrepreneurial talents14. However, the first author to represent the post-entry
evolution of newborn firms formally was Boyan Jovanovic in his celebrated contribution in Econometrica (1982).
Jovanovic proposed a Bayesian model of noisy selection, according to which efficient firms grow and survive,
whereas inefficient ones decline and fail. In particular, in Jovanovic’s model of passive learning, firms are initially
endowed with unknown, time-invariant characteristics (i.e. ex-ante efficiency parameters); ex-post the prior
distribution is updated as evidence comes in and some entrepreneurs discover that they are more efficient than
others. Thus, in any period each firm has to decide its strategy: whether to exit, continue at the same size, grow in
size, or reduce its productive capacity.

Innovation is the way forward

An incisive appraisal of the developed countries reveals that their phenomenal economic growth was propelled by
entrepreneurship, which is rightly regarded as a key to economic prosperity. Entrepreneurship is the capacity and
willingness to start a new business venture and the hallmark of entrepreneurial spirit is innovation and risk taking.
Countries like USA, Japan, Denmark, Germany, Taiwan are quintessential of the role that entrepreneurship can
play in the economic development of a country and, therefore, are role models for other nations aspiring to achieve
self-sustained growth in the ever increasing competitive global market.
To promote entrepreneurship it is important that the people with innovative ideas and skills have access to the vital
entrepreneurial resources like money, talent and know-how to initiate new business, especially small and medium
size enterprises. One of the major objectives of the governments and its economic managers is to ensure full
employment in the country or trying to ensure the creation of maximum job opportunities

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Employment Generation
Entrepreneurs not only give employment to the entrepreneur but also a source of direct and indirect employment
for many people in a country. Unemployment is a chronic problem in most of the developing and underdeveloped
countries. 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
Entrepreneurial development is looked at as a vehicle for employment generation through promotion of small
business. India, being far more developed and forward-looking country than some of the third world countries, can
provide lead to entrepreneurial development activities. However, India can benefit from the well- documented
success experiences of developed countries like USA, Japan and UK in the field of employment generation and
small business promotion.

Promotes Capital Formation

Entrepreneurs mobilize the idle funds which lead to capital formation. The funds which are used by entrepreneurs
is a mix of their own and borrowed. This leads to creation of wealth which is very essential for development of an
economy.

Small Business Plan Dynamism

Great dynamism is one of the qualities of the small and medium enterprises. This quality of dynamism originates
in the inherent nature of the small business. The structure of small and medium enterprises is less complex than that
of large enterprises and therefore facilitates quicker and smoother communication and decision- making. This
allows for the greater flexibility and mobility of small business management. Also, small enterprises, more often
make it possible for owners, who have a stronger entrepreneurial spirit than employed mangers, to undertake risk
and challenges.

Balanced Economic Development

Small business promotion needs relatively low investment and therefore can be easily undertaken in rural and semi-
urban areas. This in turn creates additional employment in these areas and prevents migration of people from rural
to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts
should be directed towards this sector. Small enterprises use local resources and are best suited to rural and
underdeveloped sector
The growth of industries and business in these areas lead to a large number of public benefits like road transport,
health, education, entertainment, etc.… Setting up of more industries leads to more development of backward
regions and thereby promotes balanced regional development.

Innovations in Enterprises
Business enterprises need to be innovative for survival and better performance. It is believed that smaller firms have
a relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by
large investment in existing technology. Thus they are both free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small firm’s growth in India. An increased number of
small firms are expected to result in more innovations and make the Indian industry compete in the international
market.

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Better standards of living
Entrepreneurs play a vital role in achieving a higher rate of economic growth. Entrepreneurs are able to produce
goods at lower cost and supply quality goods at lower price to the community according to their requirements.
When the price of the commodes decreases the consumers get the power to buy more goods for their satisfaction.
In this way they can increase the standard of living of the people.

Self-Reliance
Entrepreneurs are the corner stores of national self-reliance. They help to manufacture indigenous substitutes to
imported products which reduce the dependence on foreign countries. There is also a possibility of exporting goods
and services to earn foreign exchange for the country. Hence, the import substitution and export promotion ensure
economic independence and the country becomes self-reliance.

Facilitates Overall Development

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established,
the process of industrialization is set in motion. This unit will generate demand for various types of units required
by it and there will be so many other units which require the output of this unit. This leads to overall development
of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply
their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall
development of the area

Entrepreneurship in Pakistan
Entrepreneurship is viewed by economists to be a combination of innovation and risk taking. When such activity
thrives, high growth rates are achieved as well as opportunities offered to all of society, including the poor. They
offer benefits through growth and employment. In Pakistan, innovation and risk taking is severely inhibited by the
intrusive role of government of country. From the starting days of strategy, when protection and subsidy policies
determine winners in the market, entrepreneurship has been diverted to government favors. Government’s economic
policy is also seeking to promote growth through a basically ‘mercantilist’ approach where local commerce through
serious neglect is regulated. This sector either employees most of the poor or offers them entrepreneurial
opportunities although deregulating this sector could be a priority in and anti-poor planning.
To development of an entrepreneurship culture in the Pakistan, the system of laws and policies that are promoting
it will have to be dismantled. Entrepreneurship development as a conscious mechanism in Pakistan is a recent post-
colonial phenomenon. This has been an exciting period in which international aid was sought with the purpose of
achieving economic development. The international networking of research with fledgling local counterparts
dedicated themselves to developing policy instruments for delivering this noble purpose. Sadly, even after 60 years
poverty persists and other countries, like Pakistan, are caught in poverty.
Entrepreneur growth requires institutes prerequisite which underpin human transactions. Those prerequisites are
those that human civilization has evolved over the many years. Economic aid is working only where the policies
and institutional environment is good. This again lends support to the ‘primacy of institutional’ arguments. A society
that gets the institutional set up described above goes on to achieve economic development. Entrepreneurship may
be directed towards the accumulation of wealth through unproductive enterprise. The system of incentives that a
country sets up in its governance mechanism can either promote healthy entrepreneurship leading to economic
growth and prosperity or rent seeking where productive activities are at a discount. In the latter case, a society gets
stuck in a low poverty-low growth trap.

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In Pakistan, the policies have always been biased towards the high class of country. This is true of the economic
policies which have been biased towards the high scale sector. Rather than entrepreneurship, policies are planned
for investors and investments became the norm. Incentives were offered to attract investment. Such incentives
included licensed monopolies in protected markets, cheap land and credit and subsidized inputs.

Promoting entrepreneurship has its own importance. According to Global Entrepreneurship Monitor’s 2010 report,
Pakistan lags in start-ups, with less than half the rate of early-stage entrepreneurial activity found in other factor-
driven economies. Part of the problem is that most young people coming out of universities prefer searching for a
job instead of exploring entrepreneurial career opportunities – one of the key findings of CIPE-P@SHA dialogue
with students and start-ups. Even young people who choose to enter paid employment often have trouble finding a
job, are badly paid, or wind up in casual or informal jobs, according to the World Bank.

To help encourage a more entrepreneurial spirit among youngsters, the Islamabad Chamber of Commerce and
Industry recently organized a major conference for young entrepreneurs focusing on the theme of “Inspiring a New
Wave of Entrepreneurship,” part of the Young Entrepreneurs’ Forum. Established in 2008, the goal of the Forum
is to encourage young entrepreneurs to take on a role in policy advocacy and nurturing the next generation chamber
leadership. The conference was sponsored by the US Embassy, with additional support from CIPE Pakistan.