Entrepreneurship: How innovated and small bussiness affect economy - Research Paper Example

So, one can say that increase in entrepreneurship has a positive influence upon the economic growth and vice versa. But the real life situation is a complicated one. If there is increase in entrepreneurship there can be two options that can be present in economy either there are lesser job opportunities that people are shifting towards getting self-employed or there are important barriers that as a last resort people are creating their own job opportunities. In this scenario one can say that high levels of entrepreneurship can be observed when there are slow economic growth in the country or if there is lag in development opportunities.(Z.J.

Acs, 2004 ) There are different kinds of entrepreneurship opportunities available; one need to know which type is prevailing in order to know its impact on the economy. One type is opportunity entrepreneurship in which the new business is opened in the unexplored or wrongly explored area. Other type of entrepreneurship is opening up a business because you do not have any other option. It is believed and that is proven by research also that it is the opportunity entrepreneurship that has significant affect upon the economy.(A.Varga, 2005) It has been observed that the development economies monitor the affects upon the economy in three different stages that are.

In the first or primary stage, the basic focus of the microeconomics factors and supply demand is upon small manufacturing concerns and the agricultural yields enhancement. In the secondary stage the development economy moves from the small production units to more organized and comparatively larger manufacturing concerns and finally in the third and last stage the development economy moves from manufacturing towards the services sector development.(Syrquin, 1988) In the first stage most of the people are self employed, independent of the type of organization.

No matter what sort of economy it is industrial or subsistence, every economy faces this