Entrepreneurship is a force of economic growth because of their novel business concepts and technology.
Startups can be aided by governments with pro-entrepreneurial measures such as Estonia’s e-residency policy and policies that foster business innovation and sustainable growth. This will not only allow startups to expand and contribute to national GDP but will ensure sustainability for a healthy economy.
Increased Productivity
Startups are disruptors, they create new technologies and business models and resulting productivity and growth. Entrepreneurship also often generates spin-off businesses and consumer spending, which add directly or indirectly to GDP. The companies such as SpaceX and Stripe were once small startups but have expanded to be huge employers now – SpaceX directly hires over 1000 employees and Stripe hires thousands! And once these ventures do well, the local communities get richer which in turn goes back into other enterprises for future economic growth.
Although startups add a positive amount to GDP, they’re still not doing it for long-term success. The risks of regulating or complying with law are very high, patent disputes between the smartphone giants is an excellent case study of IP risk stalling the startup flow. Startups must face these challenges without putting the health of the economy at risk – and governments can get startups there through policy tools that foster innovation while also supporting overall economy health.
Job Creation
Entrepreneurs, rather than businesses, can capture investment that leads to economic growth and create jobs for the national good.
Startups can get so much more productive by eliminating inefficiencies, doubling sales, and competing more aggressively in the market. It causes lower expenses which helps to sell your products and services at affordable rates.
The research indicates that startup businesses actually create more jobs than their failure rate indicates, and high-growth startups, or gazelles, are more productive on the whole than they destroy.
Other startups become international companies, and contribute to world trade and to the economy of their country. Firms such as Infosys, Alibaba, Microsoft and Google bring direct benefits to their city sites – young professionals who join them in their labour force; improved employment conditions on the ground; enhanced economic activity through innovation in technologies and jobs for workers – all of which leads to an increase in economic activity.
Increased Tax Revenue
Economic vibrancy in startups equates to revenue generation that helps economies and municipalities; Google and Microsoft both have proven it through their locality of presence.
So startups are crucial to promoting innovation and driving national productivity. Meanwhile, entrepreneurs could introduce disruptive products or services into monopolies that throw economic waters – or drain GDP temporarily if it had a permanent effect. Governments need to strike a balance between the good for startups and the protection of the economy from potential economic disruption.
And the answer is that most countries are coming up with policies that support startup development. Such policies essentially mean cutting taxes or loosing rules in order to make the nation more attractive to entrepreneurs, so that startup investments are more productive, and tax revenues and economic growth are higher – which is what governments increasingly care about. Hence more and more governments are investing in cultivating dynamic startup ecosystems.
Diversified Income Sources
The startups often create technologies that disrupt the established industries, adding GDP by way of productivity gains. Start-ups such as UiPath build automation software that will save workers money and improve the efficiency of business operations – directly and indirectly boosting GDP. So too do consumer expenditures, which enjoy the fruits of these innovations.
Startups can increase their GDP by diversifying revenue streams, so market crashes or product discontinuities that are about to stall them can be avoided. They can continue to fund their company with another revenue stream, even if one item ceases to be fashionable.
Start-ups are a crucial part of any country’s economy, but startups should always balance innovation and economic sustainability. To do this, incentives for entrepreneurship that keep the economy solvent could be implemented – taxes on startups that promote entrepreneurship or expansion, and programmes of retraining for workers affected by automation.
