Explain the role of an entrepreneur in export promotion and import substitution.

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An entrepreneur has a similar, but not identical, role under both import substitution and export promotion models of economic development. Import substitution is based on the idea that a country can stimulate its own economic growth (particularly in the earliest stages of its development) by creating its own domestic industries to replace foreign imports. Entrepreneurs would be needed in an import substitution model, not so much to come up with brand-new ideas as to come up with new ways to execute known ideas. Their primary role would be to find a way to make products that are cheaper to produce or more attractive to local populations than the foreign imports. It is notable that most import substitution models rely on tariffs to restrict imports, which would perform part of the entrepreneurs' task for them. Furthermore, import substitution is sometimes (though not always) a state-led project, which would also diminish the need for private entrepreneurs. Economists also theorize that import substitution slows technological progress by removing opportunities for the "cross-fertilization" of ideas that comes from trade. This means that an import substitution model may result in fewer entrepreneurs with valuable ideas over time.

In an export promotion model, entrepreneurs would be needed to come up with ideas for products and services that would be attractive to the rest of the world, either based on their price of production or their novelty, quality, or other unique characteristics. This is the scenario that generally creates the type of entrepreneur that is popular in the public imagination, like Bill Gates. Furthermore, economists theorize that export promotion and free trade promote faster technological progress. Export promotion models, therefore, do not just depend on entrepreneurs—they also produce them.

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An entrepreneur is an individual responsible for developing and establishing a business. The entrepreneur exploits a business opportunity by setting up an entity that meets market needs. The individual or group is expected to manipulate the factors of production to provide goods and services.

An entrepreneur is not restricted to operate locally. They implement expansion strategies and introduce their products and services in other regions where opportunity exists. In this regard, the entrepreneur is responsible for perceiving and acting on business opportunities in other countries.

An entrepreneur will also exploit locally available opportunities. The individual or group would develop products and services to compete with existing providers (local producers and importers). However, for the venture to be successful, the entrepreneur is expected to offer superior value. In this regard, the entrepreneur is responsible for innovation and invention to improve the goods or services.

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Entrepreneurs are important in both of these sectors (and really in all sectors) because it is their innovation and their willingness to take risks that allow them to make goods and services that can be exported or that can take the place of imports.  Looking at India as an example, we can see that it has been a leader in the export of services to the United States.  In order for this to happen, entrepreneurs had to come up with the ideas for the various companies that now export services.  Without entrepreneurs, no one takes the risks needed to allow an economy to grow.

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