'Entrepreneurship becomes a source of livelihood to those who do neither have capital to earn interest on nor have the land to earn rent.'

Which function of entrepreneur in relation to economic development is highlighted in the above lines?

Generation of Employment

The correct answer is option 2- Generation of Employment.

Generation of Employment is highlighted in the given lines.

Generation of Employment: Every new business is a source of employment to people with different abilities, skills and qualifications. As such entrepreneurship becomes a source of livelihood to those who do neither have capital to earn interest on nor have the land to earn rent . In fact, what they earn is not only a livelihood or means of sustenance but also a lifestyle for themselves and their families as well as personal job satisfaction. As such entrepreneurs touch the lives of many, directly as well as indirectly.

OTHER OPTIONS

• Contribution to GDP: Increase in the Gross Domestic Product or GDP is the most common definition of economic development. You are aware that income is generated in the process of production. So, entrepreneurs generate income via organisation of production be it agriculture, manufacturing or services.

• Capital Formation: The entrepreneurial decision, in effect, is an investment decision that augments the productive capacity of the economy and hence results in capital formation. In fact, GDP and capital formation are related to each other via Capital Output Ratio (COR); more precisely Incremental Capital Output Ratio (ICOR) that measures the percentage increase in capital formation required obtaining a percentage increase in GDP.

• Improvement in Economic Efficiency: You are aware that efficiency means to have greater output from the same input. Entrepreneurs improve economic efficiency by,
  a) Improving processes, reducing wastes, increasing yield 
  b) Bringing about technical progress, that is, by altering labour - capital ratios. If labour is provided with good implements (capital), its productivity increases.