Question

In recent years renewed attention has been given to the role of entrepreneurship as a foundation of economic development. However, because there is not a direct link between entrepreneurship and economic growth, and because entrepreneurship is still not well understood, we need intermediate variables or linkages to explain how entrepreneurship influences economic growth. Interestingly both entrepreneurship and the intermediate linkages will depend upon underlying cultural and institutional conditions. Discuss.

Answer 1

Entrepreneurship has been undervalued and has not sene sufficient interlinkages to growth of economy.

However the real fact is that entrepreneurship makes individuals job creators than job seekers and hence the cascading effects come into picturesque where each entrepreneur creates thousands of jobs on average and who in turn reduce unemployment rate and drive the economy. If these efforts are coupled with an expansionary fiscal policy by government and relaxation in startup laws and labor codes, the magic kicks in and brings higher disposable incomes which all in turn raise consumption and aggregate demand and sledgehammers economy to higher potential. These institutional conditions like private investment and cultural inhibitions of perceiving entrepreneurship as less risky helps drive economic engines.