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Entrepreneurship is important for a number of reasons: from promoting social change and stimulating new employment to driving innovation and helping accelerate economic development. Entrepreneurial businesses in particular enhance economic growth by introducing innovative technologies, products and services, and, entrepreneurs are equally, if not more, important when the economy is doing badly, according to Alexander S. Kritikos.
The Covid-19 pandemic has changed the trajectory of many businesses around the world as well as driven unemployment to a record high. However, as Kritikos writes, when unemployment is high and the economy is contracting or stagnating, dynamic entrepreneurship can help turn the economy around.
By developing novel products or increasing competition, new firms can boost demand, which could in turn create new job opportunities and reduce unemployment. If entrepreneurs are consistently encouraged, in difficult economic times as well as good, then all businesses are kept on their toes, motivated to work continuously to improve and adapt. Entrepreneurial activities may also influence a country’s economic performance by bringing new products, methods, and production processes to the market and by boosting productivity and competition more broadly.
Realizing these advantages requires institutions that contribute to an environment that is friendly to entrepreneurs. In particular, it is important to protect intellectual and other property rights, streamline and enforce commercial laws, improve the business climate, reduce regulatory burdens, and create a culture of second chances for entrepreneurs who fail.
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