Role and contribution of Small Business towards Economic Development
The small businesses play a vital role in the economic development.Today the small businesses are the heart of the market economy with their buying and selling of products and services.In the United States they make up 97% of all the non farm enterprises.
Small businesses play an important role in the all round economic development of a country like India where millions of people are unemployed or underemployed,where most of the entrepreneurs are not capable of investment and where there is dearth of capital and capital equipments.In India even though the nature and the size of the businesses are similar to that of small businesses of USA but the nomenclature is different.In India it is called as Small Scale Industry(SSI).
The following are the important contributions of small business towards economic development.
(i)The small businesses have greater flexibility in their operations.They are much better placed in catering to individual tastes and changing fashions.
(ii)The small business are generally labour-intensive.They thus ideally suit the country where capital is scarce while labour is super abundant.
(iii)The developing nations are endowed with large fund of traditional skills.Small scale industries provide opportunities for profitable employment of these skills.
(iv)The only practical way to provide the people with livelihood is to ensure expanding employment opportunities to them.Small scale industry with their extensive employment potential can thus play a vital role in relieving the widespread and object poverty.
(v)The small businesses often make use of local resources which otherwise may go waste.They provide opportunities for entrepreneurship to many more persons.They thus promote entrepreneurship which is an essential factor in economic development.
(vi)Artistic handicrafts earn valuable foreign exchange for the country.It is able to contribute 35% of the much needed foreign exchange earnings through exports.
(vii)The distributions of net value added is less unequal in small scale industries.Hence they help to avoid extreme inequalities of income,wealth and economic power.
(viii)While large businesses take years to put up and attain reasonable levels of capacity utilization,small scale units can be contributed and brought up into operation in a much shorter period.In a situation where there is need to avoid inflation and to raise the level of living of the masses calls for quick increases in output,the small businesses play important role.
(ix)Decentralization of production made possible by small businesses can provide a check on excessive and premature urbanization which is a serious problem.
(x)The intimate and personal relationship that exists in small industries are more conducive to peaceful and cooperative industrial relations.
The small businesses play a vital role in the economic development.Today the small businesses are the heart of the market economy with their buying and selling of products and services.In the United States they make up 97% of all the non farm enterprises.
Small businesses play an important role in the all round economic development of a country like India where millions of people are unemployed or underemployed,where most of the entrepreneurs are not capable of investment and where there is dearth of capital and capital equipments.In India even though the nature and the size of the businesses are similar to that of small businesses of USA but the nomenclature is different.In India it is called as Small Scale Industry(SSI).
The following are the important contributions of small business towards economic development.
(i)The small businesses have greater flexibility in their operations.They are much better placed in catering to individual tastes and changing fashions.
(ii)The small business are generally labour-intensive.They thus ideally suit the country where capital is scarce while labour is super abundant.
(iii)The developing nations are endowed with large fund of traditional skills.Small scale industries provide opportunities for profitable employment of these skills.
(iv)The only practical way to provide the people with livelihood is to ensure expanding employment opportunities to them.Small scale industry with their extensive employment potential can thus play a vital role in relieving the widespread and object poverty.
(v)The small businesses often make use of local resources which otherwise may go waste.They provide opportunities for entrepreneurship to many more persons.They thus promote entrepreneurship which is an essential factor in economic development.
(vi)Artistic handicrafts earn valuable foreign exchange for the country.It is able to contribute 35% of the much needed foreign exchange earnings through exports.
(vii)The distributions of net value added is less unequal in small scale industries.Hence they help to avoid extreme inequalities of income,wealth and economic power.
(viii)While large businesses take years to put up and attain reasonable levels of capacity utilization,small scale units can be contributed and brought up into operation in a much shorter period.In a situation where there is need to avoid inflation and to raise the level of living of the masses calls for quick increases in output,the small businesses play important role.
(ix)Decentralization of production made possible by small businesses can provide a check on excessive and premature urbanization which is a serious problem.
(x)The intimate and personal relationship that exists in small industries are more conducive to peaceful and cooperative industrial relations.
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