Entrepreneurship and Economic Development: A Discourse on Selected Conceptual Issues

Abstract

Entrepreneurship and economic development is one of the most widely discussed topics in the recent literature on development economics. This surge of academic interest and policy focus on the subject especially since 1990s underlines its importance as a vital determinant of economic growth. According to Schumpeter, J.A (1934) entrepreneurship is a driving force of innovation and more generally an engine for economic development. Entrepreneurs are believed to contribute to economic development and structural transformation in the economy by reallocating resources from less to more productive uses (Acs and Storey 2004) and by performing “cost cutting”, “gap-filling” and “inputcompeting” functions in the economy (Leibenstein, et. al. 1968, Hausman and Rodrik, 2003). Many other eminent economists and scholars including Adam Smith, J. B. Say, Alfred Marshall and Frank Knight also emphasize an entrepreneur’s role as a leader and organizer and coordinator of production and recognize entrepreneurship as a fourth factor of production.