Entrepreneurs play an important role in production. In every type of production, element of risk always exists. It is only the entrepreneur who bears risks involved in business. It is due to this fact that entrepreneurship is regarded as an indispensable factor of production. As the risk element in the business (due to operation of several unforeseen factors such as change in demand, technology, etc.) has gone up in modem production, the importance of entrepreneurship has increased considerably. In fact, greater the element of risk, greater is the importance of entrepreneurship in production.

The truth is that the economic development of a country is determined by the number and quality of its entrepreneurs.

(i) The size of national income which is considered the indicator of economic development of a nation is largely determined by the amount and quality of entrepreneurial resources. What is produced, how much is produced and how efficiently is produced, all depend upon the class of entrepreneurs. A country will be able to produce a large amount of output and generate a large national income if it possesses a large number of entrepreneurs with a modem outlook.

(ii) Secondly, entrepreneurs mobilise idle savings of the public through the issues of shares and . debentures. Investment of these public savings in industry results in capital formation which is regarded crucial for economic development.

(iii) Thirdly, entrepreneurs generate employment opportunities and thus help to reduce unemployment problem in the country.

(iv) Fourthly, they also set up industries in the backward areas of the country to avail various concessions and subsidies provided by the government. In this way, they help to reduce regional disparities in the country.