If a country wants to increase prosperity and welfare, then the country should focus on its economic growth. Most institutions in a country create the environment for the creation of wealth that leads to increasing economic growth. For this, both public and private sector collaborate to increase productivity, but, in developing nations institutions are not strong enough to lead to an increase in economic growth. This is because institutions in these countries concentrate on profit at the expense of consumers.

 

 

The key to growth and development is the healthy relationship between the Entrepreneurship and government institutions. However, in developing nations the situation is opposite; the government doesn’t function at an optimal level so as to boost entrepreneurship – which is essential to boosting a nation’s economic growth. The reasons behind the failure of economic growth are the lack of three important ingredients: ownership rights, rule of law and free trade. As far as entrepreneurship is concerned, it is the main solution to stimulate the economy in a developing nation, as entrepreneurs allocate scarce resources and produce better commodities to satisfy the needs and requirements of the people. 

 

 

When government institutions are not involved in entrepreneurship, there is genuine competition among entrepreneurs, as a result of which there will be innovations in the economy. Furthermore, due to competition the prices of goods will lower benefitting each citizen and expanding access to commodities – even those commodities that were hitherto out of the reach of large chunks of population. A combined result of innovation and lowering of prices of commodities is the availability of better quality goods at cheaper rates for the population. 

 

 

 

 The views expressed above belong to the author(s).