Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help increase Net National Product and Per Capita Income in the country.

Functions Of Entrepreneurs In Economic Development:

(i) Capital formation: Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilization of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.

(ii) Improvement in per capita income: Entrepreneurs explore opportunities and exploit them. They convert talent and idle resources like land, labor, and capital into national income and wealth as goods and services. They help increase the net national product and per capita income in the country, which are important indicators for measuring economic growth.

(iii) Improvement in living standards: Entrepreneurs set up industries that overcome the scarcity of essential commodities and introduce new products. The production of goods on a large scale and the manufacture of handicrafts, etc., help in improving the standard of living of a common man in the small scale sector. Offer goods at these low costs and increase consumption diversity.

(iv) Economic independence: Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries. Businessmen also export goods and services on a large scale and thereby earn scarce foreign exchange for the country. Such import substitution and export promotion help to ensure the economic independence of the country without which political independence has little meaning.

(v) Backward and forward links: An entrepreneur initiates change in which there is a chain reaction. There are many backward and forward linkages in establishing an enterprise. For example, the setting up of a steel plant creates many ancillary units, and the demand for iron ore, coal, etc. expands. There are backward relationships. By increasing the supply of steel, the plant facilitates machine manufacturing, tube making, vessel manufacturing, and the development of other such units.