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Entrepreneurship is cornerstone of economic growth

Entrepreneurship is cornerstone of economic growth

Mohab Ayoub is a well-known entrepreneur in UAE. His treasure of knowledge about economy, entrepreneurship and establishing a company successfully may enlighten youth generation due to his advice on entrepreneurship and correlation of economic growth. 

To be successful, to add value to your country and culture, highly recommend you to read each knowledge that is spelled into his words. 

As you might all hear, economic growth leads to increased prosperity as the income levels of the people living in a country rise, in which this development includes social and cultural enhancement in the economy along with prosperity. 

Mohab Ayoub preciously emphasizes that ‘’Entrepreneurship, which is included in production, labor, capital and technology factors and brings them together, takes risks and evaluates opportunities, has an important role in economic growth and development. Basic elements of a country’s economic development are individuals with an entrepreneurial spirit,’

‘’They are the driving force of growth and prosperity. The impact of entrepreneurs on economic development can be linked to their inventions/scientific research and discoveries; Their innovations can be associated with the ability to make adaptation innovations, productivity through competition, creating employment, job opportunities and increasing their production and commercial activities’’

Entrepreneurship and Economic Growth 

Mohab Ayoub ‘’The economic growth and development of countries depends on the entrepreneurial activities taking place in that country, since entrepreneurs create new jobs, provide many new products and services, increase competition, thanks to technological change,’’ says.  

The entrepreneur transforms the production resources into the factors of production by directing the economic resources to the most productive fields, combining them with the new styles he/she has put forward. Therefore, entrepreneurs undertake important missions towards the society they live in, and the missions they undertake make them important for social and economic development;

  • One of the most important problems in less developed countries is unemployment and this problem is caused by the lack of new investments originating. The most effective way to avoid unemployment is to establish their own businesses. Hence the number of  entrepreneurs are higher, the higher the employment rate will be.
  • Increasing the number of entrepreneurs will increase the social welfare and quality of life.
  • Entrepreneurs will lead to improve science and technology both by using science and technology and transferring resources to these areas.
  • Entrepreneurs abroad advertise their country.
  • Entrepreneurs use unused potentials to prevent them from being idle.

Correlation Between Economy and Entrepreneurship

Carree argues that there is a correlation between entrepreneurship and economic growth in the long term and that a country where optimum entrepreneurial activity does not occur will show a low rate of macroeconomic growth. For example, the low rate of job ownership in the 1970s and 80s led to high levels of unemployment. High unemployment rate can push individuals to start their own businesses due to low costs of entrepreneurship. However, if self-employment exceeds the equilibrium rate, it is expected that this will result in reduced profits due to increased competition, resulting in failures, high rates of exits and fewer entries. In other words, the optimum ratio of entrepreneurial activities ensures the growth of the country’s economy.

Previous Data Shows That Entrepreneurship is the Cornerstone of Economic Growth

Entrepreneurship ranked 11th among 142 most innovative countries according to the Global Innovation Index 2013 report. It is observed that innovative activities are carried out by entrepreneurs in Canada with a high level. Canada, which has an innovation-oriented economy, is among the developed countries where entrepreneurship activities are high with an entrepreneurship rating of 12.2%. According to the GCI 2013 report, the university-industry cooperation rate is quite high in making and implementing innovations. The USA, on the other hand, is 5th in terms of global innovation.

Countries with high entrepreneurship scores among developing countries rank higher among countries with the same economic level in terms of innovation. It is possible to say that there is a positive relationship between the level of entrepreneurship and innovativeness for developing countries with productivity-oriented economies. Looking at the less developed countries, the same trend is seen, but it is not possible to say that every country with a low economic level has a direct proportion between the level of entrepreneurship and innovativeness.

Sum up;

Entrepreneurial activities are the main factor that changes the industrial structure of the economy in countries or regions. The existence of the relationship between economic growth and structural change in industry goes back to the times of Schumpeter, and from the traditional Schumpeterian point of view, the level of economic growth occurs when the industry uses scarce resources most effectively.

Hence, a change in the industrial structure is reflected in growth rates. Small businesses are one of the most important factors that make the change in the industrial infrastructure. As the number of small businesses increases (ie entrepreneurship increases), an improvement in the structure of the industry can be seen. 

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