Discuss the Relationship Between Entrepreneurship, Innovation and Economic Development

2003 words 9 pages
Discuss the relationship between entrepreneurship, innovation and economic development.

With the rapid development of a dynamic global economy, increasingly countries are seeking breakthroughs in their economic development. Stimulated by these ever-increasing competition pressures, exploitation of new ideas and businesses which provide great potential for economies to thrive, accordingly, is gaining widespread attention (Mansfield, 1972; Wong et al., 2005). In consequence, on a global scale, not only some developed countries with strong capability to absorb and implement new ideas, but also some emerging developing countries, are taking measures to inspire entrepreneurship and innovation with the purpose of benefiting economic development
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(2009). They examed 20 countries in Organisation for Economic Co-operation and Development for 21 years and eventually came to the conclusion that entrepreneurship could positively affect economic development, with remarkable improvements in the perspective of competitiveness and new firms establishment. Wennekers and Thurik (1999) are in the same line with Braunerhjelm and state that entrepreneurship makes contribution to economic development by some process such as enhancing competitiveness, creating new firms and new jobs, and improving productivity. Besides, with increasing practice, Schumpeter’s notion (1912), where economic growth and employment are provided and motivated by new businesses and existing firms which result from entrepreneurship, is widely accepted (Reynolds, 1999; Fritsch and Muller, 2004). In addition, statistical research of the manufacturing sector by United Kindom Her Majesty's Treasury (2005) demonstrated the essential role of innovation for British economy. As their research result shows, 1.2 million jobs were provided by newly established businesses from 1997 to 2005. However, according to Hoffmann and Junge’s research (2006), UK has still approximately 18 percent less businesses than America, and he maintains that much higher entrepreneurial activity rates in America may be the reason for this to some extent.

Creativity and problem solving which are both entrepreneurial

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