Building an economy: Government planning vs. Entrepreneurial innovation
Introduction
The economy of a nation is one of the building blocks for its citizens. It is important to note that there are various key players who influence and control the economy in one way or the other to ensure that it is better, and these are the government and the entrepreneurs. The role that is assumed by the government to the economy is mainly regulatory. In this case, such an entity sets policies that should be applied in the economy. On the other hand, when it comes to entrepreneurs, these persons play an active role that ensures that the economic conditions are improved, and this is done by introducing offerings that will help in meeting an unsatisfied need. The offerings are the product of entrepreneurial ideas.
However, to attain competitiveness, it is noted that the economy relies on the plan by the government and the innovation by the entrepreneurs. The combination of these two elements will serve a great deal in stimulating overall economic growth and development. For instance, the entrepreneurs are known to make the economy better in the community in which they live or come from by creating firms. This subsequently leads to the creation of employment. Employment creation is one of the factors that significantly boosts the economy as it leads to an increment in GDP (Yu, 2011). Apart from that, employment creation implies that the government will be able to yield additional taxes from its initial revenue collection level. These collected revenues by the government, when utilized well, can help in building the economy.
Nevertheless,the government also plays a significant role in enhancing economic wellbeing, and this is by setting legislations that will favor the move by the entrepreneurs. For instance, the policymakers have an understanding that the entrepreneurs usually face resource constraints, and this is what makes them start with limited financing. Given this case, the government may set policies that will enhance the smooth running of the initial operations of the entrepreneurs such as giving the entrepreneurial ventures time to grow before they can ask for licensing(Mazzucato, 2017).
Conversely, it is noted that the value of the entrepreneurs is felt both at the local and international levels. In this case, the regions with high levels of entrepreneurial activity are known to experience high levels of growth in GDP. An analysis at a global scale indicates that entrepreneurship accounts for a third of the differences in the economic growth rates between nations and that their relationship with international trade is stronger, given the increased rates of technological innovation and invention. The effect of this is that there is increased idea sharing among entrepreneurs leading to the introduction of missing commodities, thus making the society a better place.
An analysis of entrepreneurship at a local level indicates that the entrepreneurs increase their local incomes and wealth; aspects that help in building the economy.However, some entrepreneurs usually establish their respective enterprises so that they may attain a given level of quality of life. In other words, entrepreneurs may establish business enterprises for their selfish gain. This will still lead to the stimulation of the economy as there will be some sort of cash flow from their initiated activity(Kressel, & Lento, 2012).Such kind of flow is what directly contributes to the building of the economy.
Conversely, the innovation by the entrepreneurs usually benefits the members of the community as this leads to the introduction of something new or unusual in the society that changes lives for the better. The new services and products by the entrepreneurs, which is a product of their innovation, adds value to the economy and, at the same time, improves the overall quality of life among the community members. When the quality of life is improved, the members of the community are able to get actively involved in building the economy and this can be done through using the innovation to make the economy better.
Conclusion
In conclusion, the government and the entrepreneurs play a critical role in determining the overall wellbeing of the economy. In this regard, the government mainly plays a regulatory role by setting policies that control the activities of the entrepreneurs. Apart from that the government also plays a supportive role in ensuring that the interest rates are favorable for borrowing so that the entrepreneurs may be able to access loans at affordable rates to finance and implement their idea. On the other hand, the entrepreneurs play the role of coming up with ideas and implementing them. This role is the most critical as it is the one that leads to economic growth and development. When the policies formulated by the government are favorable, the entrepreneurs will be able to smoothly put their ideas in picture.
References
Kressel, H., & Lento, T. V. (2012). Entrepreneurship in the global economy: Engine
for economic growth. New York: Cambridge University Press.
Mazzucato, M. (2017). The entrepreneurial state: Debunking public vs. private sector myths.
Yu, F.-L. T. (2011). New perspectives on economic development: A human agency
approach. Wageningen: Wageningen Academic Publishers.