What is the importance of business in a country's economy?
Businesses range from one-person enterprises to huge global corporations and from those existing in the informal barter economy to vast state-owned enterprises. They can be for-profit, with an avowed purpose of making money for shareholders, or not-for-profit, with the purpose of trying to improve the world. A teenager earning some spare cash by babysitting or shoveling driveways is as much a business as a huge oil corporation or a chain of big box retail stores.
The reason businesses are important is that they are a vehicle for the exchange of goods and services. Especially in complex modern societies, we cannot rely on ourselves and our families to survive. Farmers raise food, but buy farm equipment, clothing, cell phones, and other consumer goods. People who work in factories need to buy food and rent or buy houses. We depend on universities and schools for education and doctors for medical care. Even direct barter would not fully enable us to exchange all the things we need for modern life.
Businesses are the growth drivers of the economy of a country. They employ people, provide income to the working population, buy resources, sell products, bring innovation, generate foreign capital, fulfill our daily necessities, etc. Businesses can be multinational, national, regional or domestic scale and employ people of all skillsets (in full time or part time or contractual positions). This generates employment at all levels across the country. Businesses also generate indirect employment in terms of people engaged in raw material production that businesses need and also those involved in selling these products. Large scale businesses import and export raw materials, products and services and generate foreign exchange for the economy. In a competitive market, businesses create innovation and novelty and also provide entrepreneurial opportunity. All these (and other associated activities) drive the economy of a country.
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Business is hugely important in a country’s economy because it is the main economic engine for the country.
Businesses are a very important part of the circular flow of any market economy. They buy resources from households in the resource market and sell to households in the product market. This makes them indispensable to the economy.
Businesses also allow the economy to work more efficiently. When businesses compete with one another, they improve their efficiency and help the economy grow. They also help the economy grow through innovations of various sorts. No market economy can thrive without businesses.
The economic growth of a country is produced by business. Business provides services, goods and incomes for both, employees and business holders.
The development of a country is sustained by multinational corporations, medium and small sized businesses. This development is usually perceived as being supported by the multinational corporations, but mostly the family businesses and individual entrepreneurs are the greatest contributors to this development.
While small size, local businesses are of great importance in the development of a country, offering an income to the majority of people, the multinational corporations are of great importance in global economy. Many multinational corporations rely on local small size business through outsourcing and not all small businesses remain at this level. They could grow and while growing, the local economy is stimulated, because the headquarter of a company which has developed, will not change the location and community.