What is the contribution of entrepreneurship in the economy?

Question

What is the contribution of entrepreneurship in the economy?

Answer 1

"entrepreneurship'  I believe is a French term probably meaning 'new enterprise'.

An entrepreneur is really just a businessman, an owner of a firm, perhaps he wears a scarf, where as a CEO is just in a business suit. The use of the term is to imply a certain creativity at giving what the consumer wants by starting one or several different businesses.  An entrepreneur is contrasted to the stereotypical greedy boss or the man in the grey flannel suit.

The entrepreneur, by starting a business, starts the whole ball of wax. He is often the manager, decided where to next invest, and change the business.

The whole point of supply and demand is that entrepreneur's and business will ofter products that people want. typically, someone will make a new market hoping to capture monopoly profits. But then, as the technology and information flows, prices fall back down to costs. But now there is more products available for consumers to buy. So the entrepreneur might start another business.

Answer 2

On the one hand, it is obvious that entrepreneurship is essential to rapid economic growth; on the other no one agrees on how to measure it and so confirm its importance.

Entrepreneurship is about changes in the way of doing business, new products, etc. You can't have much growth without it.

On the other hand, classic economic theory is all about the steady state equilibrium under given conditions and there is no good way to bridge the gap.

And even when economists started looking at growth as a topic for research, they did not include entrepreneurship as a factor:

http://www.treasury.gov.au/documents/135... -

Among the obvious examples:

1. When computing the basket of goods to be used in comparisons over time (determining inflation, etc.) how do you compare the products available today with the products available a decade or more ago?

2. We live in an era where the economies of the developed world are primarily focused on services. But economists had no way to measure the productivity of service workers other than in dollar output and hours in.

So, for many years, it seemed clear that computers did make people more productive, but no one could prove it because they had no good way to measure it.

http://en.wikipedia.org/wiki/Productivit...

But economists are trying:

http://www.extension.org/pages/Measuring...

http://www.nowpublishers.com/product.asp...

http://organizationsandmarkets.com/2006/...