The Role of Entrepreneurship in Economic Development in Bangladesh
A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
The entrepreneurs with their ability to scan, analyze and identify opportunities in the environment transform them into business proposition through creation of economic entities. Entrepreneurship and economic development are intimately related. So, that entrepreneurial process is a major factor in economic development and the entrepreneur is the key to economic growth. Whatever be the form of economic and political set-up of the country, entrepreneurship is indispensable for economic development. Entrepreneurship is an approach to management that can be applied in start-up situations as well as within more established businesses. According to Joseph Schumpeter, the rate of economic progress of a nation depends upon its rate of innovation which is turn depends on rate of increase in the entrepreneurial talent in the population. According to Meir and Baldwin, development does not occur spontaneously as a natural consequence when economic conditions in some sense are right.
A catalyst is needed which results in entrepreneurial activity to a considerable extent. The diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs. They play a vital role for the economic development of a country in the following ways. 1. Effective Utilization of Resources: Entrepreneurship is all about putting to better use the resources which are considered to be of low value with an aim of earning income. An entrepreneur comes up with ideas of how to use what others may consider waste. This improves the economy of a country through taxes and creation of jobs which improves the standard of living of the beneficiaries. 2. Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the lookout for opportunities.
They explore and exploit opportunities, encourage effective resource mobilization of capital and skill, bring in new products and services and develop markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth. 3. Improvement in Physical Quality Of Life: Entrepreneurs supplement the economic growth by enhancing the physical quality of life. Establishment of enterprises leads to increase in employment avenues both directly and indirectly. Consequently, poverty is alleviated as per capita income grows. This results in improving the physical quality of life which is an indicator of economic growth.
4. Growth of Infrastructural Facilities: Entrepreneurs help in the growth of infrastructural facilities such as roads, bridges, buildings, factories, etc. which are the cornerstones of economic growth. Establishment of factories and industries in a particular locality presupposes the growth of infrastructural facilities. 5. Export Of Handicraft Items: Entrepreneurs play a significant role in producing and exporting handicraft items. They generally use the local traditional skill, traditional technology, local knowledge and experience for producing traditional art and craft and handicraft items. Nowadays, such items of Bangladesh are on demand in foreign markets – Hand-loom Products, Leather Products, Clay Products, Straw Art Products, Hand Made Paper Products, Wooden Products, Bamboo Products, Recycled Materials Products, Date-Leaf Products, Palm-Leaf Products, Jute Products, Recycled Glass, Ceramic, Cane Products, Embroidery Item, Palm Fiber Products, Tin Sheet Products & Christmas decoration Products etc.
They are both exported to foreign markets and sold locally at markets in Bangladesh which has become immensely popular with foreigners, as well as the local people. 6. Promotes Capital Formation: Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealth, which is very essential for the industrial and economic development of the country. In Bangladesh, Micro-credit programs incorporate skills-based training which fosters human capital formation among participants. Also, the group-based nature of the lending format facilitates interaction between members which allows them to benefit from one another’s experience and knowledge. Both of these facets of the micro-credit model exist to promote the productive capacity of the poor, which is essential to their own economic advancement.
7. Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. Today, SME remains the engine of economic growth and considering the population of Bangladesh, SME offers large-scale employment and income earning opportunities at relatively low costs, especially in the rural areas. It strengthens efforts to achieve high and sustainable growth, which is a prerequisite for an exit from widespread poverty and socio-economic deficit. 8. Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas.
The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to more development of backward regions and thereby promotes balanced regional development. 9. Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment of change and try to maximize profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country. For example-ERP(Enterprise Resources Planning) in Bangladesh. It is a system of enterprise which promises to greatly change four dimensions of business: firm structure, management process, technology platform, and business capability. At present in Bangladesh, companies can use ERP to support organizational structures that were not previously possible or to create a more disciplined organizational culture.
10. Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area. 11. National Self-reliance: Entrepreneurs are the corner stores of national self-reliance. They help to manufacture indigenous substitutes to imported products which reduce the dependence on foreign countries. There is also a possibility of exporting goods and services to earn foreign exchange for the country. Hence, the import substitution and export promotion ensure economic independence and the country becomes self-reliance.
12. Planned Production: Entrepreneurs are considered as economic agents since they unite all means of production. All the factors of production i.e., land, labor, Capital and enterprise are brought together to get the desired production. This will help to make use all the factors of production with proper judgment, perseverance and knowledge of the world of business. The least combination of factors is possible avoiding unnecessary wastages of resources. 13. Equitable Distribution Economic Power: The modern world is dominated by economic power. Economic power is the natural outcome of industrial and business activity.
Industrial development may lead to concentration of economic power in few hands which results in the growth of monopolies. The increasing number of entrepreneurs helps in dispersal of economic power into the hands of many efficient managers of new enterprises. Hence setting up of a large number of enterprises helps in weakening the evil effects of monopolies. Thus, the entrepreneurs are key to the creation of new enterprises that energies the economy and rejuvenate the established enterprises that make up the economic structure.
From the above discussion it can be said that we must initiate to explore the potential excellence and open scopes for people of all classes across the country and exploit these for the constructive development of the society and country. The government of Bangladesh also needs to ensure that people of small means should have access to facilities to undertake economic activities at appropriate scales throughout the country. Once the overall framework is in place, mobilization of more resources and more effective utilization of the available resources will be facilitated. If all these factors work together under one umbrella, only then economic progress and development can be achieved. Huge human resource can be turned towards a revolutionary device for effective economic growth through exploring entrepreneurial opportunities. To summaries, economic situation of Bangladesh cannot really improve without entrepreneurship efforts. In Bangladesh, the term for an entrepreneur is a ‘businessman,’ which carries with it a set of negative connotations.
The assumption is that one goes into business if one cannot be a banker, doctor, engineer, lawyer, professor or a corporate worker. In movies, businessmen are portrayed as crude, immoral people. In day-to-day life, a businessman is only considered successful if he can achieve conspicuous display of wealth. Despite our negative views of ‘business’, the private sector has a crucial role to play in growing the economy and providing employment opportunities. The private sector is the engine of innovation in all sectors of the economy. Entrepreneurship in Bangladesh currently thrives in two sectors of the economy — among the poorest of the poor (14 million households) and among the well-off (about 2.5 million households).
The reason for this is that both of these sectors have access to institutional financing. The change in mindset can perhaps be attributed to the realization that notwithstanding advances in scientific, social, political and economic systems, the gap between rich and poor is widening. With many social problems continuing to plague societies and some even worsening, concern regarding the effectiveness and sustainability of governmental and welfare-based approaches to social problems has increased. This in turn has directed greater attention to the work of entrepreneurs.
How Entrepreneurship has been growing in Bangladesh
The entrepreneurial history of Bangladesh dates back to the ancient era. In the ancient age, Bengal was rich in different small and cottage industries as well as trade and commerce. During pre-Mughal Muslim rule, an entrepreneur class grew in Bengal, especially in and around Dhaka. They had lofty craftsmanship in handicraft, textile weaving, milk products, jewelry etc. The British rule in India, however, introduced a new phenomenon in entrepreneurial activities. The British forced the entrepreneurs to produce whatever they needed at home to sell at lower prices. This had a negative impact on the growth of entrepreneurship in this part of the world. After the Partition of Bengal in 1947, the eastern part of the then Pakistan did not inherit an experienced entrepreneurial class for historical reasons. Neither did this part receive adequate attention from the then government of Pakistan in terms of economic incentives to induce entrepreneurial activities.
The then East Pakistan Industrial Development Corporation (EPIDC), however, had set up some enterprises, especially a number of jute mills, and gradually handed over their ownership to the local associates. This had indirectly helped the growth of an entrepreneur class in Bangladesh. The country inherited a shattered economy after the war of liberation in 1971. Mills and factories were closed down, agricultural production was interrupted and infrastructural facilities like roads, bridges, railways, power transmission lines, telephone network, gas pipe lines etc., were broken down. Because of the political commitment and also because of the exodus of non-Bengali owners of mills, factories and banks, the government had nationalized all such establishments immediately after liberation. Within a few years after independence, the government policy was changed and the role of the private sector given due importance. The disinvestment and denationalization policies have facilitated the ownership of large, medium and small industrial and commercial enterprises by Bengali entrepreneurs, although the size of the public sector continued to dominate in Bangladesh.
This promoted development of state entrepreneurship in the country. The government, however, brought changes in trade and industrial policies, alongside the monetary and exchange rate policies. Import controls were considerably relaxed to reduce the level of protection, thus encouraging efficiency in resource allocation and promotion of competitive abilities of domestic industries. However, wide-ranging economic reforms initiated in recent years have restored confidence among the entrepreneurs and induced prospective and potential entrepreneurs to come forward and set up new businesses. Industrial policies adopted in different years attempted to create an investment-friendly environment and encouraged entrepreneurship development. Reforms were also made in import policy, fiscal policy and taxation policy, along with liberalization of trade and investment to increase both local and foreign investment. In Bangladesh, quite a number of entrepreneurial ventures have been the creation of corporate spin-offs.
They embarked upon new ventures with the experience and skill that they gathered while serving an enterprise. These spin-offs have been found to be very successful because they have the necessary experience and skills in managing and running enterprises. What they needed was only a little back-up support. Such support gave them a big push and they proved themselves to be very successful as entrepreneurs. In Bangladesh, the garment industry has been the creation of spin-offs. Similarly, many chemical engineers starting their career in the Bangladesh Chemical Industries Corporation (BCIC) ultimately left their jobs and started new chemical/ pharmaceuticals enterprises. A special group of entrepreneurs, creators of the corporate new ventures, identified technically as entrepreneurs, create new products and processes within large organizations. They do not start a new enterprise or industry but create new products with their innovative and inventive ideas.
Their corporate entrepreneurship opens up new horizons of opportunities for the corporate structure where they serve. The establishment of many new chemical plants/product lines under the BCIC is an example of corporate entrepreneurship. State patronage has played a significant role in the growth of entrepreneurship in Bangladesh. The elite of the society, belonging to the defense forces, civil bureaucracy and different chambers and trade bodies as well as bankers, politicians, doctors, contractors etc., have turned themselves into successful entrepreneurs under state patronage. Public policy favored the growth of such entrepreneurs in the country. A host of banks, insurance companies and buying houses had also developed under such entrepreneurship. In many countries of the world like India, Japan, South Korea etc., sub-contracting has been used as a unique and effective tool for the promotion of small and medium scale entrepreneurs.
Sub-contracting as a concept in industrial development strategy began to gain ground in Bangladesh from the First Five Year Plan (1973-78). The Sixth Five Year Plan has also laid special emphasis on the growth and development of linkage and sub-contracting amongst the big, medium and small industries. Various policy and promotional measures were also adopted to accelerate the development of sub-contracting in the country. But apart from a few multinational companies like Bata Shoe Company and Bangladesh Tobacco Company Limited, public sector enterprises have not developed a positive attitude towards this system. An import-biased policy and fiscal anomaly also impede its proper development.
Economic Development through Entrepreneurship in Bangladesh Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka in the first of a two-part write-up based on its study of the environment under which entrepreneurship has been growing in Bangladesh. Entrepreneurship nowadays is universally recognized as a critical resource in the economic development process of a country. There is widespread concern that the acceleration in gross domestic product (GDP) growth during the last three decades has not been accompanied by a commensurate expansion in employment. In large scale industries, the problem of unemployment and underemployment is more. The magnitude of micro-entrepreneurial activities, on the other hand, plays a decisive role in the economic development of the rural livelihoods. Micro-entrepreneurship has always been considered as a proven instrument to fight poverty in an effective manner. As a consequence, poverty alleviation through rural-centric micro-entrepreneurship development has been focused for the last forty years in Bangladesh.
In view of this fact, development of entrepreneurship received serious attention among the policy-makers, planners and development economists as a strategy of economic growth. It has been stated that in the next two decades the industrial sector needs to make a 25 per cent contribution to the GDP and a 20 per cent contribution to the employment to enable Bangladesh to step into a middle-income country. To achieve these targets, entrepreneurship development needs a more advanced level of business operation, among others. It is recognized that government and some development agencies, including non-governmental organizations (NGOs), have taken up initiatives for entrepreneurship development.
The government has provided various incentives. However, despite such initiatives, the state of entrepreneurship in Bangladesh has not yet reached to the level of expectation. There are a number of prevailing factors that thwart the development of entrepreneurship in Bangladesh. Along with institutional factors, non-institutional ones encompassing various political, economic, social, cultural, technological, environmental and personal factors are affecting the scopes of operating the economic activities to a significant extent. The Metropolitan Chamber of Commerce and Industry (MCCI) has made an attempt to study the environment under which entrepreneurship has been growing in Bangladesh, identify the factors affecting the development of entrepreneurship, and suggest a composite policy measure to overcome such encumbrances.
Role of Women Entrepreneurship in Economic Development of Bangladesh Bangladesh is an overpopulated country with limited resources and higher social stratification. Economic, political and social recognition are determined on the basis of gender, class and location (WED, 2001). The urban areas have greater opportunities for business development while rural areas lag behind. Nearly half of the population is women the enormous potentiality of the population has been unutilized as few women participate in the mainstream of economic activities. For instance, only 16% of women are self-employed out of 66% self-employed citizen (based on entrepreneurship status). Encouragingly, there is a rising of a new class in rural Bangladesh; they are the women entrepreneurs who have accepted the challenges of life and have emerged as leaders in the socio-economic development, thus earning for themselves and for their families and contributing towards the socio-political up liftment of women.
Consequently, entrepreneurship has become an important profession among women in both rural and urban areas. Women in rural areas are being self-employed through the agricultural and nonagricultural sector, as entrepreneurs. These activities are cropping, livestock and poultry rearing, fish farming, nursery and tree planting, tool making, handcrafting, food processing, tailoring, rice processing, etc. Women entrepreneurship is not only a source of income generation but also a way of achieving economic independence. Women that are involved in enterprise are better off compared to those that are not. Realizing the importance of women entrepreneurship, Bangladesh Government has taken several initiatives to encourage women getting involved in various micros, small and medium enterprises.
However, there is a greater lack of integration among various supportive organizations and lack of communal efforts to have sustainable benefits. The remaining challenges are lack of collateral free loans, traditional technology, skilled and trained manpower, training and educational institutions, and infrastructure and utility services and so on. Hence, there should have rights policy adjustment, their proper implementation and others necessary initiatives will pave the way for the emergence and development to women entrepreneurs and utility services and so on. Hence, there should have rights policy adjustment, their proper implementation and others necessary initiatives will pave the way for the emergence and development to women entrepreneurs.
Profile of Successful Entrepreneurs
Mr. Samson H Chowdhury:
Mr. Samson H Chowdhury was a successful entrepreneur in Bangladesh. In 1952, he started a small pharmacy in Ataikula village which is about 160 km off capital Dhaka in the north-west part of Bangladesh. Mr. Samson H Chowdhury then ventured into a partnership pharmaceutical company with three of his friends in 1958 and they named it SQUARE because it was started by four friends and also because it signifies accuracy and perfection meaning quality” as they committed in manufacturing quality products. SQUARE today is a name not only known in the Pharmaceutical world, it is today a synonym of quality- be it toiletries, health products, textiles, Agro Vet products, information technology and few more.
All these were possible due to his innovative ideas, tireless efforts, perseverance and dedication with self confidence which contributed to his successful achievements. Now the name “SQUARE” inspires trust. Under his dynamic leadership, SQUARE is set to continue its progress globally. Mr. Samson H. Chowdhury, a recognized and leading entrepreneur of the country, is the Chairman of MTB. He has been an icon of the pharmaceutical industries in Bangladesh for decades. He is also the Chairman of the renowned conglomerate, Square Group, which comprises of Square Pharmaceuticals Limited, Square Textiles Limited, Square Hospital Ltd., Square Toiletries Ltd., Square Consumer Products Ltd., to name a few. Mr Chowdhury holds key positions in various reputable organizations. Mr. A. S. F. Rahman:
Mr. A.S.F. Rahman comes from a pioneering business family that has played a significant part in the economic development of Bangladesh. He is the Chairman of Beximco Group that comprises of 32 companies, out of which 11 are listed on the Dhaka Stock Exchange. The group has diversified interests in the fields like manufacturing Textiles, Pharmaceuticals, IT and Media, Jute, Real Estate, Construction, Ceramics and Retail among others, and is the largest business conglomerate in Bangladesh. Beximco Group’s current annual turnover is over US$ 300 million and some of the most prestigious international brands are its customers. With the changing demands of globalization, in order to achieve economies of scale and competitiveness in the emerging environment, Mr. Rahman has been able to establish fully integrated vertical manufacturing operations in a remarkably short period. Beximco today is not only the largest private taxpayer, but also the biggest private consumer of natural gas in Bangladesh. It is also significant employer, with over 30,000 people on its direct payrolls. Mr. Rahman has chaired many eminent positions.He has about 40 years of business experience.
Mr. A.K. Azad:
MR. A.K. Azad a former President of Bangladesh Chamber of Industries has been elected President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) the national apex trade body for the term 2010-2012. His company Ha-meem Group now comprises more than 40 industries which includes exports oriented Garments Industries, Textiles, Jute Mills, etc. The group employs more than thirty thousand people. He is also a sponsor Director of Shahjalal Islamic Bank, Sonar Bangla Insurance Co. Mr. Azad is a media personality of the country. He is the publisher and owner of the Daily Samokal, a leading Bengali national daily. He is also the Managing Director of Channel 24, a electronic media which is expected to go in the air very soon. In recognition of his contribution in the export of Readymade Garments he was given C.I.P status and Gold Export Trophy by the Govt. of Bangladesh. In the social field, he is a philanthropist. He is the founder of primary schools, high schools, Madrasha, Child hospital and life member of Faridpur Diabetic Samity and Medical College hospital in Faridpur. He is a member of prestigious Kurmitola Golf Club, Gulshan Club and Dhaka Club.
Mr. Salman F. Rahman:
One needs proof that some men are born for greatness, no clearer example exists than Salman F. Rahman. His father is Fazlur Rahman, formerly Pakistan’s Home Minister and Education Minister, and his brother is Sohel F. Rahman, who is co-proprietor of the Beximco Group. Mr. Salman F. Rahman is not satisfied to simply rest upon his accomplishments. He continues to explore and expand into new endeavors within the group’s numerous industries which include pharmaceuticals, ceramics, textiles, media and property development. Within the Beximco Group, Rahman in his incredibly broad vision has striven to establish a culture of Corporate Social Responsibility. With such a business philosophy, Salman F. Rahman has carried the Beximco Group far beyond its position as the largest private sector entity in Bangladesh. Through its involvement in matters of regional and national interest, the Beximco Group has been transformed from simply an amazingly successful corporation into a force for positive change.