Welcome to unit 1, video 6. Why Entrepreneurship? In this video, we will explain how entrepreneurship helps the economy. We will discuss why people become entrepreneurs and we'll talk about some of the challenges that entrepreneurs can have. Let's review what entrepreneurship means, the making of a new business. First let's look at how entrepreneurship helps local and global economic development. What is economic development? Economic development is the effort that improves people's quality of life, by creating and maintaining jobs, and supporting or growing incomes. Jobs and incomes, it provides people with money to spend. Entrepreneurship can help economic development by creating jobs. It can do this in two ways. A startup, a new business that did not exist before, creates a job for the entrepreneur and people the entrepreneur hires. This can include family and friends or people in the community. These people have money to spend to buy things and services in the economy. This helps the people who sell those products or services so they also have more money to spend. This creates economic development. An example of this job creation can be seen in the article that you read. Entrepreneurship seen as a solution to South Africa's unemployment crisis. Marshawn created a company that produced a Drybath gel. Marshawn now has a job. And he hired other people to work for his startup, who also now have jobs. All of these people now have money to spend. Which provides money to people who sell things. This creates economic development. A startup also creates jobs for suppliers. Suppliers are the people who provide things and services for the company. Marshawn needs to buy things to make his Drybath gel from suppliers. Maybe he also needs to buy services like electricity or tax advice. These are also suppliers. Some of these suppliers buy from other suppliers or they employ people. A lot of money can pass to many people who provide supplies. This is good for economic development. Entrepreneurship can help economic development in creating jobs. But it can also help the economy by creating innovation. What is innovation? Innovation is a new idea or a method. Entrepreneurs often create innovation in a product or service. Why is innovation important? It can improve people's lives and increase economic development. How does it do this? Innovation can lead to increased access to resources. People now can do something that they could not do before. An example of this kind of innovation is the use of smartphones in rural Africa to do banking. People do not have access to banks before. This innovation allows for safe and efficient money transfer. Small business people can buy, sell, and save money more easily. They are more confident to start a business. Innovation can also lead to better use of resources. People can do more with what they have or use less of what they have but benefit the same. An example of this kind of innovation is improved technology in car engines. Cars can use less gas or petrol to drive the same distance or farther. People do not need to buy as much gas as a result. This saves them money, and saves the resource of gas for the future. Better use of resources can keep prices lower, and can sometimes benefit the environment and society. If engines use less gas, there might be more gas available, which could lower the price. People have money to spend on other things now. If less gas is burned, the air might be cleaner. This also benefits the environment and society. Innovation has another benefit, it can provide a better quality of life. Marshawn dry gel can help people stay clean and more comfortable even the water is not available to wash in. Think of all the innovations in transportation, in medicine, and in communication that have improve to quality of life for people in just a past few years, we've talked about how entrepreneurship can create jobs and innovation. It can also help increased private funding. Private funding is money that comes from individuals, not the government or NGOs. NGOs are non governmental organizations that promote economic development. An example is Oxfam, an organization that helps reduce poverty throughout the world. How can entrepreneurs increase private funding? If there are many entrepreneurs with good ideas, people with money will be interested in providing funding to them. Usually the more entrepreneurs there are, the more private funders there are, the more private funding, the more entrepreneurs can be successful. Silicon Valley in California has many famous startup companies. Because it has a large number of both entrepreneurs and private funders. This combination creates economic development. We will discuss private funders in more detail in unit 4 of this course.
