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 Form 1 Business Studies online lessons on entrepreneurship

Meaning and importance of entrepreneurship in an economy

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Answer Text:
Meaning of entrepreneurship
This is the process of identifying business opportunities and gathering the necessary resources to start and run a business.
Importance of entrepreneurship in an economy.
-Creation of employment-Through entrepreneurship, jobs are created which help in absorbing people who would otherwise have been jobless e.g. people employed in the jua kali sector.
-Formation of capital-Profit earned by entrepreneurs may be used to expand the business or even to start other businesses. Wages and salaries paid to the employees is a source of capital to them.
-Raising standards of living-Entrepreneurs pay wages and salaries to their employees which enable them to acquire goods and services they need to live comfortable lives.
-Encourages the use of local resources-Entrepreneurship makes it possible to use/exploit local resources. Idle resources such as scrap metal may be used to make jikos.
-Improving infrastructure-The existence of businesses in the economy makes the government establish or improve infrastructure such as roads
-Reducing foreign dominance of the economy-
-Promotion of technology/promotion of innovation, research and development