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THE ROLE OF ENTREPRENEURSHIP
1. Define Entrepreneurship Entrepreneurship, a multifaceted concept, is grounded in the idea of innovation, encompassing inventive approaches across realms like technology, marketing, human relations, and management. Professor Nathaniel Left's perspective on entrepreneurship underscores its essence as the capacity for innovation, investment, and the expansion of products and work techniques. This involves taking risks and committing resources to create something unique, introduce new production methods, or explore untapped markets. It is crucial to recognize that entrepreneurship extends its reach beyond the business domain, finding applications in sectors such as education and healthcare. The distinguishing factor lies in its emphasis on generating something new or different, emphasizing the transformative power of innovation. The competitive edge derived from innovation is evident in successful entrepreneurs, as seen in the exemplary practices of Japanese businessmen. The introduction of improved products or services aligns with consumer preferences, establishing a tangible advantage. Furthermore, innovations that reduce costs, labor, and time contribute significantly to the overall economic benefit. 2. Differentiate economic development from economic growth Development involves a process, whereas growth is the product. In agriculture, activities such as applying fertilizers, insecticides, utilizing labor, machines, and other productive inputs constitute the developmental process. The end results or outputs manifest as crops like rice, corn, or sugar. Put simply, development refers to the input, while growth signifies the output. 3. What are development and growth theories:
a) Laissez-faire Theory: Coined by the Physiocrats, these French terms advocate for economic freedom, proposing a hands-off approach by the government in economic affairs, emphasizing an absolute free enterprise economy. b) Keynesian Theory: Advocating government intervention, especially in less developed or economically challenged countries, this theory asserts that the government plays a pivotal role in economic development. c) Ricardian Theory: Formulated by David Ricardo, an English classical economist, this theory posits that land is the key factor in economic growth, highlighting the significant role of agriculture in economic development. d) Harrod-Domar Theory: Conceived by Sir Harrod of England and Professor Domar of the United States, this theory asserts that the primary driver of economic growth is physical capital, particularly machines. It contends that greater efficiency and production result from the use of machinery. e) Kaldor Theory: Proposed by Nicholas Kaldor, this theory emphasizes technology as the crucial factor in economic success. It suggests that the application of modern technology in producing goods and services has been instrumental in the prosperity of highly developed countries like the US, Japan, Great Britain, Italy, and Germany. f) Innovation Theory: Developed by Joseph Schumpeter, this theory underscores the role of innovators or entrepreneurs in economic development. Schumpeter argues that innovators, with their courage and imagination, can transform outdated systems and bring about positive change. g) Non-Economic Theories: Several non-economic theories consider factors such as political stability, efficient public administration, an open society, and positive cultural values as crucial elements influencing economic development.
4. Contributions of Entrepreneurs
genuine economic growth. He defined economic nationalism as the control of a country’s economic resources by its own people, who should use these resources for their own benefit and enjoyment. Recto argued that allowing foreigners to dominate the economy is the cause of our poverty. Recto further criticized the U.S. educational system, claiming that it instilled a desire for political liberty but neglected to cultivate economic nationalism among Filipinos. Instead, he believed that it subtly encouraged economic dependence on America. In the present day, our educational system should prioritize patriotism and economic nationalism. Although these concepts are mentioned in our Constitution, there is still a prevalent colonial mentality among many Filipinos. This attitude is counterproductive to the Philippine economy. Other countries prioritize their own products, which is beneficial for their own economies. Our educational system should also emphasize the importance of local entrepreneurship in its curriculum. Filipinos tend to be employee- oriented, especially when it comes to white-collar jobs. Many are hesitant to start their own businesses due to the fear of bankruptcy. This lack of entrepreneurial spirit, particularly among professionals, has allowed foreigners to take advantage of our cheap labor and abundant natural resources. As a result, they have become wealthy while exerting influence over our own country. It Is important to foster a sense of economic nationalism, promote local products, and encourage entrepreneurship among Filipinos to regain control over our own economy and promote sustainable development.
6. Discuss the relationship between the government and entrepreneurship. In underdeveloped economies, the government plays a major and active role in economic development. Aside from setting up the economic infrastructures, like roads, bridges, transportation, communication and electric facilities, the government is directly involved in business and industry where the private business sector has no or inadequate investment. However, when the economy has developed, the government has to phase out its economic activities in favor of entrepreneurs. At this stage, it is the private business sectors that become the engine of economic growth. Because it is more efficient and proper. Although, entrepreneurs are risk-takers, self-
reliant and optimistic, there are factors which encourage or discourage them to invest. Obviously, the primary factor or determinant of investment is profit. This is brought about by several factors like peace and order. Income of the people, electricity, transportation and communication facilities. It is very clear, therefore, that there is a very strong and direct relationship between the government and entrepreneurship. It is the government that provides the basic incentives to entrepreneurship. In return, entrepreneurship accelerates economic development through more employment, production and consumption. Precisely, this is the goal of the government for the people. Hence the great interest of the government in the promotion of entrepreneurship.
7. Define the following: a. Investment This refers to the allocation of resources, usually in the form of money or time, into a business venture with the expectation of generating a return. Entrepreneurs invest resources into their businesses, hoping to create value and gain profits in the future. They foresee investment and production opportunities, organize an enterprise to undertake a new production process, raise capital, hire labor, arrange for the supply of raw materials, and select top managers for the day-to-day operation of the enterprise. b. Profit In entrepreneurship, profit is the financial gain that is realized when the revenue generated from the business exceeds the expenses incurred in operating the business. It’s the reward for the entrepreneur for taking the risk of starting and running the business. Profits can be reinvested back into the business to drive growth, or distributed to the business owners. c. Incentive In the entrepreneurial context, an incentive is a motivational factor that encourages an entrepreneur to take certain actions or make certain decisions. This could be financial incentives such as potential profits, tax breaks, or grants, or non-financial incentives such as personal satisfaction, independence, or the opportunity to make a difference. Incentives play a key role in motivating and driving the entrepreneurial behavior.
during the Industrial Revolution in England. The negative consequences of the laissez-faire policy gave rise to social reformers like Karl Marx and Robert Owen. Their efforts led to the formation of labor unions and government programs to support workers. The bitter experience in England serves as a valuable lesson for governments around the world. The role of the government is to promote the welfare of all sectors of society, including producers, consumers, employees, businessmen, and others. Achieving a fair balance of support among all members of society can be challenging. However, a good government always considers social justice as a fundamental principle in public administration. The welfare of the poor and marginalized should be given priority and assistance from the government. Without addressing the needs of a vulnerable society, it is difficult to achieve a healthy economy and stable government. Hungry people are less likely to abide by laws and contribute to societal well- being.
10. Elaborate the government assistance program. Government Assistance Program 1) Peace and order****. Countries with news of forthcoming rebellion or revolution cannot attract investments. The various coups of rebel soldiers have driven away not a few big foreign investments. Also, kidnappings of foreigners and rich Chinese have discouraged investors. In fact, some big Chinese businessmen went abroad. The NPAs likewise contribute to the decline of investments in the rural areas. Businessmen have to pay revolutionary taxes to the NPAs in exchange for their safety and that of their enterprises. 2) Political stability****. There is political stability when there is no frequent change in the government, especially through the use of force or violence. In our country, government policies are not stable. Every change in administration is also a major change in government policies. This is not conducive to entrepreneurship. The programs of the government change as soon as a new President assumes his office. There is nothing wrong with change if it is for the better. But Philippine politics is different. There are many political debts to pay to big businessmen who contributed
campaigns funds. As a result, favoritism creeps in to the prejudice or disadvantage of small businessmen who have no connections.
- Price stability. Prices are stable if there are no abrupt changes or fluctuations in the prices of goods and services and in the exchange rates. When the value of the US dollar falls, importers are happy, but not the exporters. When prices keep on increasing. investors are reluctant to do their business. It is hard to plan costs of production and project profits when prices are not stable.
- Taxes. These are needed to fund government projects and programs. However, the payment of taxes should be based on the ability to pay scheme. Tax incentives can encourage entrepreneurs. Many foreign investors choose other countries due to their fair tax programs. The lagay system is a form of additional sax. It is used to expedite transactions in government agencies. There is a "highway tax imposed by men in uniform for products coming from the provinces. There is also the "NPA tax" in the rural areas.
- Infrastructures. These constitute the foundation of economic development. Roads, bridges, transportation, communication and electricity are vital to business. Without them, trade, commerce and industry remain primitive and limited. In the Philippines, the beautiful super highways have no real economic value if these are not linked to the farms. Until now, many remote farms have no farm- to-market roads. Because of this shortcoming, the supply of products has become scarce in urban centers. And yet in remote agricultural villages, there is a surplus. This is not favorable to village producers because they cannot market their products.
- Education and training. It has been said that real development is people development. Money, machine, land and material are only productive if people know how to use them properly. Knowledge and skills are not enough. If productive resources benefit only a few, it is not wisely utilized. What is more needed is relevant social values, aside from knowledge and skills. The Bible says the fruits of the earth should be enjoyed by everyone. The best way to develop the mind, body and spirit is
micro business if they have the capital. To encourage the growth of an entrepreneurial economy, adequate and cheap credit facilities should be made available to the masses.
