Importance Of Business

What is the importance of business in a country's economy?

There are four essential benefits of businesses to economies, including providing the government with revenue through taxes, creating employment, boosting innovation, and generating output.

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One very critical reason that business is important to the overall economy is that the business sector provides goods and services to consumers that the government either does not provide or feels it should not provide. Business and commerce generally are driven by economic and profit incentives. If a company finds that it can make a profit by selling widgets, it will manufacture, market, and sell widgets.

Businesses also are driven by competitive motivations to innovate and adapt, thereby creating improvements based on consumer feedback and shifting consumer patterns of behavior. Mobile devices are an example of a product that has revolutionized the ways people consume many services and information and business, in turn, responds to changing consumer behavior. Mobile phone adoption has outpaced the adoption of most other electronic products. Given rising mobile penetration, there has been a shift in how people connect to the internet, as people increasingly rely on their mobile devices instead of their desktop computers. This has facilitated the mobility of the consumer population and, in turn, also changed how people engage in commerce, driving businesses to online at growing rates. All of this change is predicted on the role that commerce plays in an economy.

In an economy such as ours, government cannot be the ultimate source of all the goods and services that people demand and consumer. The government does not have the bandwidth, and it is not the government’s role to supply all consumption needs. Businesses step in and assume this role. Companies produce food products, clothing, and discretionary items because consumers want these items and are willing to pay for them. However, because companies are motivated by profit incentives, there are many times that government regulations need to provide a framework to ensure that companies behave in appropriate ways.

Last Updated by eNotes Editorial on January 21, 2021
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Every business is required to give a percentage of their earnings to the government. Corporate taxes provide the government with money to proffer public services. The government uses that money for infrastructure projects that boost the welfare of citizens.

Businesses require employees to operate efficiently and effectively. The founder cannot do everything by themselves. They require someone to help with bookkeeping, customer care, and other office duties. Employment is good for an economy because it bolsters the purchasing power of consumers. As a result, citizens can enjoy a higher quality of life.

Businesses compete against each other for the same market. Companies want to have an upper hand over their competitors; that’s why they invent things. Businesses often result in a more innovative economy. For example, smartphones didn’t exist before 2007. But one company saw the need for a phone with multiple functionalities and decided to create a gadget that no one had ever seen before. Hence, the iPhone was born. Today, smartphones are part of everyone’s lives.

Finally, businesses help to boost the GDP of an economy by increasing output to meet customer demands. A business comes up with an idea to solve a problem through a unique product offering. In the process, they establish a new market for a product that never existed before. These new products are included in the country’s gross output.

Last Updated by eNotes Editorial on January 21, 2021
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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. 

 

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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.

Hope this helps.

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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.

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