Background Of Prime Definers Of Entrepreneurship Commerce Essay Example

type of economy and government policies. In economies like Europe and America where privatization is prominent, there is a greater existence of entrepreneurship due to a sense of ownership in these nations.

However,in the 1970's Pakistan experienced significant changes in government policy when all private businesses were taken over.This change diminished the potential for entrepreneurship in the country while Europeand America continued to foster entrepreneurial activities due to their policies promoting privatization.In my research, I give significant importance to highlighting the role of entrepreneurs in driving economic growth, particularly in developing countries like Pakistan. Entrepreneurship necessitates resourcefulness and the ability to acquire necessary resources for achieving goals. Acquiring capital is one crucial resource that entrepreneurs must creatively think about obtaining to increase their chances of success. According to managerial experts, a majority of entrepreneurs aspire for control over their own lives, which can only be attained through entrepreneurship. Research has shown that individuals derive immense satisfaction from their entrepreneurial endeavors.

In Pakistan, there has historically been a focus on large-scale production rather than Small and Medium Enterprises (SMEs). The Economic Census of Pakistan-2005 indicates that there are 3.2 million business ventures nationwide, with SMEs constituting over 99% of them. These SMEs contribute to 78% of industrial employment and approximately 35% of value addition. Among SME activities, retail trade, wholesale, restaurants, and the hotel industry make up 53%, while industrial establishments and service providers account for 20% and 22% respectively.

In this era dominated by information technology (IT), the world has become interconnected like a global village. IT has revolutionized various aspects of life and brought significant advancements.
The introduction of computers in Pakistan began in the 1960s with the

installation of second-generation computers in Karachi. Computers have had an unprecedented impact on human existence, surpassing any other invention. They offer services such as computational intelligence, neural networks, genetic algorithms, data communication and networks, and databases among others, making them a powerful tool for development.

However, the IT industry in Pakistan faces limitations in entrepreneurship activities compared to other developing countries. This is due to factors like government policies, socioeconomic infrastructure, unstable political conditions, lack of government support for private businesses, unemployment, and low levels of education particularly in technical fields. The number of IT companies registered with the Pakistan Software Export Board is significantly lower than that of developed and some developing countries.

The research aims to emphasize the significance of entrepreneurship for economic growth specifically in developing countries like Pakistan. It will address questions regarding the importance of entrepreneurship for economic growth and explore obstacles hindering its development within these nations. Additionally, it will propose steps to enhance entrepreneurship within an economy and analyze how government policies impact entrepreneurial activities.The study aims to investigate the lack of entrepreneurship in Pakistan and its specific focus on increasing it within the IT industry. The literature review examines how entrepreneurship impacts economic growth and development, particularly its effects on individual businesses and the overall economy. However, there is still uncertainty about the connection between entrepreneurship and a nation's economic growth. Further research is needed to establish this link at a national level. Factors like technological advancements, globalization, deregulation, shifts in labor supply, and variations in demand contribute to changes in industry structure from centralization to decentralization. In recent years, there has been an increase in small businesses and

heightened entrepreneurial activity. It has been acknowledged that entrepreneurs perform three functions: pioneering, identifying profitable opportunities, and evaluating risks (Wagner, 2006). The importance of entrepreneurship in economic development has shifted focus towards examining its combination with housing and overall economic systems for direct impact on state growth. The question arises as to how the government can promote and enhance entrepreneurship within the country's economy if it aims to stimulate economic activity and growth. Numerous researchers have demonstrated the crucial role played by entrepreneurship in economic development.In the past, market policies supported concentration but did not prioritize entrepreneurial activities. However, in the 1980s, a new knowledge-based economy emerged that emphasized knowledge, innovation, and entrepreneurship. Although initially small, this sector quickly became significant. According to Sternberg (2004), regulations cannot effectively enhance rural area entrepreneurship compared to high-tech countries and metropolitan cities. Different techniques are needed for areas with advanced technology and knowledge. Marina Minniti identifies certain factors that can promote entrepreneurship regardless of the type of economy. By focusing on these factors, business economies can easily encourage entrepreneurship.

One important factor is the financial system, as easy access to funds enables young entrepreneurs to bring ideas into practice and generate economic activities. Another crucial factor is the tax system, which includes favorable policies for small businesses and grants for new enterprises. These measures incentivize entrepreneurs to enter the market and contribute to national GDP (Jones, 2007). However, some countries impose barriers such as quotas and duties on specific trading items from different nations which discourage entrepreneurs from pursuing new business opportunities.

Globalization has introduced various methods worldwide to promote economic growth and entrepreneurship while keeping intactGlobally, initiatives such

as chamber of commerce programs, specialized company training programs, and technological parks have been established. These initiatives provide significant advantages for entrepreneurs in developing countries (Minniti). Entrepreneurship involves transforming ideas into actionable projects, and its impact can be observed on individual, industry, and firm levels within the economy. Several studies have explored the relationship between entrepreneurship and overall economic growth. However, it is still uncertain whether specific variables related to industrial construction or innovation influence entrepreneurship within a country. The National System of Innovation (NSI) plays a crucial role in enhancing a state's innovation capabilities, which are closely connected with entrepreneurship. Different countries offer diverse opportunities for entrepreneurial activities based on their respective contexts. Nonetheless, due to a lack of understanding regarding its underlying dimensions, the link between entrepreneurship and economic growth remains unclear. Nathaniel H. Leff suggests that developing countries witness interconnections between entrepreneurship and industrial growth through economic groups like industrial groups.
These economic groups, consisting of capital, directors, and entrepreneurs from the same family with connections to authorities and access to resources, have often been overlooked in literature. However, it is crucial to recognize the significant role that entrepreneurs play in the economic growth of developing countries. These types of economic groups can be found under various names across different nations.

According to M.A. Caree and A. Tharik, entrepreneurship is not limited to small businesses; rather, small enterprises serve as a means for implementing entrepreneurial ideas (M.A.Careen & A.Tharik). Entrepreneurship extends beyond small businesses and includes both large companies and industries. Within these contexts, entrepreneurs operate either as entrepreneurs or corporate entrepreneurs by engaging in entrepreneurial activities.

The terms business communities and self-employed individuals are

used interchangeably with the term entrepreneur. The relationship between unemployment and entrepreneurship is complex - on one hand, there exists lower-level entrepreneurship known as the refugee effect; on the other hand, higher levels of entrepreneurship correspond to lower unemployment rates referred to as the Schumpeter effect.

Joseph Schumpeter's Theory of Economic Development emphasizes that entrepreneurship serves as the primary driver behind economic progress. It illustrates how entrepreneurs tackle daily challenges by utilizing new technologies that render outdated ones obsolete. This process of creative destruction fosters economic growth.Hebert and Link (1989) discuss the different roles played by entrepreneurs throughout history. They identify three types of entrepreneurs: pioneers who create new paths, profit seekers who find and seize profitable opportunities, and risk-takers who embrace uncertainty. These entrepreneurial personas can thrive in various economic systems such as market economies, semi-planned economies, or planned economies.

In a market economy, aspiring entrepreneurs are encouraged to enter the marketplace and make their mark through innovation and hard work. However, things are different in a semi-planned economy where regulations favor established companies and pose obstacles for new ventures. The most challenging environment for entrepreneurship to flourish is within a fully controlled market.

Experts believe that entrepreneurship involves innovation, assessing risks, and taking bold actions. This dynamic activity leads to high growth rates and creates opportunities across all sectors of society, benefiting even those from disadvantaged backgrounds.

Unfortunately, in Pakistan's context, the government's tight control over the market hampers innovation and risk-taking. Since the early stages of planning when protectionist policies determined winners through subsidies, favors, and protectionism, government intervention has directed entrepreneurship towards seeking governmental support instead of operating independently.The government's economic policy heavily regulates domestic

commerce with a fundamentally 'mercantilist' approach aimed at stimulating growth. Deregulation of the sector is crucial in an anti-poverty strategy because it either employs the poor or offers them entrepreneurial opportunities. The prevailing trend of seeking rent for success is further reinforced by land distribution, city zoning, and management, which restricts cities from becoming entrepreneur-friendly centers of commerce. However, these areas with heavy urban commercialism do provide employment and opportunities for the poor. To cultivate an entrepreneurial culture, it is vital to eliminate incentives and favoritism that promote rent seeking. Biased government policies towards larger businesses and landlords also hinder entrepreneurship in Pakistan and other developing nations. By analyzing these issues, necessary reforms can be identified to promote entrepreneurship. Poverty has persistently been a challenge in developing countries like Pakistan since their establishment.Increasing entrepreneurial activity within any economy often faces the primary challenge of poverty and low economic activity within the country itself.Economic growth necessitates specific institutional requirements that have developed throughout human civilization. These requirements include a rule of law, strong democratic institutions, a fair legal system with an efficient and independent judiciary, effective governance of markets and trade policies, as well as a free press and open media. All these factors are crucial for promoting entrepreneurship (Hoenig, 2005). Entrepreneurs require easy access to funds through an active financial system to bring their ideas into practice. The educational system also plays a vital role in promoting entrepreneurial activities by providing necessary education and skills (Entrepreneurship in developing countries, Nadeem ul haque, 2007). The lack of entrepreneurship is not unique to Pakistan but is a common issue in all developing nations. When Bangladesh gained independence

in 1971, there was a severe shortage of entrepreneurs. Only a small percentage of the local population engaged in private businesses and small-medium enterprises. Historically, this region excelled in entrepreneurship with industries like fabric, paper, transportation, gold production as well as manufacturing combs and buttons from bones. However, entrepreneurship started declining after the 17th century when West Pakistani business owners and small-scale manufacturing industries accounted for 98% of the sector.When they left Bangladesh, they took their capital and businesses with them, leaving the private sector struggling. Until 1990, the government in Bangladesh had significant control over the economy, resulting in limited entrepreneurship. However, market freedom was introduced and small and medium enterprises (SMEs) began to thrive once again. Despite initially lacking necessary resources, nationalized banks played a crucial role by providing capital for small businesses and startups, which helped revive the economy. The government has implemented various policies and initiatives to support SMEs and improve overall economic conditions. Infrastructure development is not the sole driver of economic development; new ideas and knowledge are also essential factors as emphasized by Romer (1994) and Grossman and Helpman (1994). Instead of solely focusing on infrastructure development and investment promotion, innovation plays a vital role in driving growth. Achieving economic development requires continuous efforts such as implementing new laws, policies, making capital investments, fostering innovation endeavors, and considering future projections. Economic thinkers carefully analyze the needs of the economy beforehand to provide necessary requirements for meeting those needs as noted by Barreto (1989,p .28).Entrepreneurial activity is crucial for achieving economic development, as it brings in new processes, markets, beginnings, and services. However, there are concerns about small businesses not

investing enough in research and development to implement these ideas. This is where institutions play a vital role by generating ideas that can be implemented and commercialized by small enterprises.

Pakistan faced numerous challenges after becoming an independent nation from India due to partition. These challenges included historical adversaries, mass migration, and the absence of government machinery and infrastructure. Initially, the government was controlled by landlords, feudal lords, and traditional administrative officials. As a result, policies were solely determined by the government.

To develop the country and provide necessary services, Pakistan relied on community contributions and international support. The text highlights how government officials and politicians in Pakistan had easy access to national resources. Consequently, their focus shifted towards implementing centralized control policies rather than supporting entrepreneurship.

Planned investments resulted in granting monopoly licenses to specific business communities favored by government officials and landlords. This created barriers for small and medium-sized businesses wanting to enter the market and contribute to national development. Throughout Pakistan's history, elites and monopolists have consistently been prioritized over entrepreneurs by the government.Government policies, such as duty protection and import controls, have hindered productivity and competition in businesses. The government's failure to promote the pursuit of new opportunities has led many business communities to remain loyal to their old family businesses. The few entrepreneurs we encountered had stumbled upon their ventures and possessed an advantage in information, whether through direct involvement or indirect means like trade or corruption. This frustrating obstacle hampers economic growth through entrepreneurship because almost every government department involved with these private enterprises takes a share of their annual sales (separate from taxes), ranging from 0.5% to 5%. Consequently, businesses allocate

teams of employees to handle these matters, resulting in increased expenses. They argue that if taxes were collected solely by the Central Board of Revenue (CBR), overall expenditure could be reduced. In countries like Pakistan or other developing nations, business management is typically done by owners rather than professionals due to reliance on nepotism and favoritism instead of professional strategies and ideas.Business owners often hesitate to trust professional directors or managers with their companies due to concerns about strict laws and potential misuse of information. To address the lack of protection from the judicial system, the Islamabad Chamber of Commerce organized a youth conference on entrepreneurship and Pakistan's national youth policy. The conference focused on skill development, micro funding, internships, and placement. It is recommended that the Ministry of Youth Affairs regularly conduct needs assessment studies to identify practical training needed by young people entering the private sector. Additionally, the Federal Bureau of Statistics should review its data collection methods in order to develop plans that promote youth employment. Collaboration between government and private sectors is crucial in creating an action plan that utilizes these statistics to generate more jobs and businesses. Extensive research and development are essential for developing a new curriculum for vocational training centers. Educational programs should prioritize hands-on application of knowledge rather than focusing solely on theory. Specific skills education programs or training institutes should be developed for sectors such as health management and first aid, hotel management, fashion design (requiring institute establishment), jewelry design, furniture design and construction, handicrafts, forest products, and cosmetology.During the Youth Conference in Islamabad on June 3, 2008, it was suggested that the State Bank of

Pakistan should provide young entrepreneurs with sustainable business plans at low interest rates. Additionally, participants proposed that universities establish business development centers and career centers to assist students in finding internships and jobs. It was acknowledged that there is a lack of entrepreneurship in Pakistan and solutions were offered. To address this issue, a multilevel approach is recommended which includes incorporating entrepreneurship theory at the micro level, institutional theory at the macro level, and corporate identity theory at the mesolevel to analyze how institutions recognize opportunities in the informal economy. A study conducted by Jstin W. Webb, Laszlo Tihany, R. Duane Ireland, and David G. Sirmon from Texas A&M University explores factors influencing transitioning to the formal economic system while examining entrepreneurship's legality and legitimacy within the informal economic system. Despite political challenges and an unstable business environment, there has been a significant increase in recognized entrepreneurs in Pakistan both domestically and internationallyThe Wall Street Journal has also covered this phenomenon, discussing the achievements in entrepreneurship and the factors contributing to them, as well as the support structure available for these innovative individuals. In the past, career options in Pakistan were limited to technology, medicine, or civil service, leading many people to seek opportunities abroad due to a lack of multinational companies (MNCs). However, there has been a shift since the 1990s with an increase in IT demand and offshore outsourcing, making computer science a popular field. The growth of the telecommunications industry has also created entrepreneurial opportunities in Pakistan. Small and medium-sized enterprises (SMEs) play a vital role in Pakistan's industrial development as they make up 90% of all businesses and employ 80% of

the non-agricultural workforce. Despite their importance, SMEs face limitations when it comes to financial resources and other necessary support systems. To address these weaknesses and promote growth, SMEDA—an organization under the Ministry of Industries & Production—offers support in areas such as technical upgrades, marketing, finance, and human resource training and development.The accomplishment of this goal is made possible through a variety of methods, including the establishment of beneficial regulations, the promotion of industrial clusters, and the provision of Business Development Services.