The Government and Entrepreneurship

In underdeveloped economies, the gov’t plays a major and active role in economic development. The gov’t is directly involved in business and industry where the private business sector has no or has inadequate investment. Of course, when the economy has developed and is able to more or less stand on its own feet, the gov’t will now slowly get out of the picture in order to give the entrepreneurs the chance to do their thing.

So it is the gov’t that provides the basic incentives to entrepreneurship. Government of most countries have financial schemes for entrepreneurs. And in return, entrepreneurship accelerates the economic development through more employment, production, and consumption. This shows that there is a very strong and direct relationship between government and entrepreneurship.[pic 1][pic 2]

Although entreps are risktakers and optimistic, there are factors that encourage or discourage them to invest. Let us always remember that PROFIT is the primary determinant of investment, why entrepreneurs invest. Its what stimulates businessmen to go into business.

However, profit depends on several factors. There are internal factors, those that the entrep has control over such as:
Management
Technology
Financial Incentives - employees
Working Conditions
For ex. the entrepreneur can improve management, change technology, or raise the salaries of employees.

There are external factors that are greatly dependent on the gov’t. These are the things that only the gov’t has the resources to maintain, and is too expensive for entrepreneurs to undertake.  
Peace and Order/ Political Stability
Income of People
Electricity
Transportation and Communication facilities
Gov’t  policies[pic 3]

Gov’t of developed countries take steps to reduce the regulatory burden on entrepreneurs such as fast approval of permits thru digital technology. Business processes become more efficient when there’s online government services.

When there is one sector that is not happy, or is in need of assistance, it is the job of the gov’t to intervene and ensure that help is given and that economic health is restored. The welfare of the poor and the powerless must always be the first to receive attention and assistance from the gov’t. Otherwise, social injustice will continue and a sick and weak society will continue to exist. When this happens, a stable gov’t as well as peace and order needed to attain PROFIT will not be achieved.
[pic 4]

So ideally, the very role of gov’t is to promote the welfare of all sectors – from the producers, to the consumers, to employees, businessmen, and the rest of society and economy, making sure that there is balance among all members of society.

There are gov’ts which believe that the bigger the population, the more number of buyers so they do not practice population control. They argue that Japan and other rich countries have more peoples than the poor countries like the Philippines. So they claim that the solution to poverty is not to control population growth, but to create more production and employment.[pic 5]