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The role of business in the economy

Summary:

The role of business in the economy is to produce and distribute goods and services, creating jobs and generating income. Businesses drive economic growth by innovating, competing, and investing in new technologies and markets. They also contribute to government revenue through taxes, which fund public services. Overall, businesses are essential for economic stability and development.

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the role in businessdescribe the role of business in the economyrole in business

The role of business is the efficient creation of wealth, by taking resources and transforming them into products or services.  In manufacturing, businesses take metals and plastics, for example, which in their crude states are not very valuable, and transform them into more highly valued cars or computers.

In services, businesses take people or intellectual property and apply them where they have the most impact, like a law firm or consulting agency. Having people, property, or natural resources inefficiently applied decreases their value and creates little wealth; having these unapplied nullifies their value and creates no wealth.

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the role in businessdescribe the role of business in the economyrole in business

Business employ people, and people go out and spend money. When the economy is not good, businesses hire fewer people and try to get more out of the employees they have. This in turn keeps the economy at a stalemate. People can't spend if they don't have jobs.
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the role in businessdescribe the role of business in the economyrole in business

Small businesses employ huge numbers of people. They are essential to cultivating a spirit of independence, risk-taking, self-reliance, and personal achievement. They require hard work, sacrifice, thinking ahead, and dedication -- all qualities worth cultivating in society.

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the role in businessdescribe the role of business in the economyrole in business

Without businesses, you can't have any sort of a free market economy.  In addition to what the previous post said, businesses also tend to provide the innovation that makes an economy grow.  For example, it was businesses that developed the idea of the assembly line that makes modern industry so efficient.

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the role in businessdescribe the role of business in the economyrole in business

Businesses have a huge role in the economy. Providing jobs is just one of the many necessary parts that business plays in any and all economies.

Businesses also serve as the access points of goods and services, either giving citizens an opportunity to buy the things they need or providing essential services like plumbing and construction.

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What is the role of business in the economy?

Business has a very important role to play in a capitalist economy. It is business activity that generates most of a nation's wealth, creates the lion's share of jobs, and provides most of the funds that go towards government spending. Simply put, without business, there would be no capitalist economy to speak of.

It's notable that even in command economies, such as that of the Soviet Union, a handful of producers were occasionally allowed to operate like businesses in capitalist economies, albeit with far greater government control and many more limitations. This was a recognition on the part of the government that the profit motive, which is the whole reason for businesses to exist, has an important role to play in the production and allocation of goods and services.

As businesses are the prime engine of wealth and economic growth in the capitalist system, governments routinely attempt to craft policies that are beneficial to them. Business-friendly policies such as tax breaks and subsidies have often been used to stimulate economic activity, especially when the economy is at a low. Such measures represent a realization on the part of government of just how important it is for the overall health of the economy that businesses are encouraged to grow and invest.

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What is the role of business in the economy?

Since business is the economic activity of individuals, corporations, partnerships, and other non-state entities, one might reasonably say that in a market system, business not only drives the economy, but essentially is the economy.

No economy is completely market-driven or completely state-planned. These are abstractions found only in textbooks. However, the closer an economy comes to being a market system, the more business driven it is. Even the most hardline communist economies feature some element of business, though the state is often one of the parties in the transaction. The only way for a state to survive without any business at all would be for it to operate on an entirely self-sufficient basis, with neither exports nor imports, and no currency, either.

In a market economy, business finances the public sector of the economy through taxation. Therefore, even though fifty percent of the country's economic activity may take the form of government spending and the state might be the largest employer, all this is financed by taxation derived from business. A rich country, therefore, is, by definition, one in which business is doing well, even though some of the outward signs of this prosperity may be manifested in activities of government, such as an outstanding system of transport, healthcare, or state education.

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What is the role of business in the economy?

Business employs people within an economy. Without jobs, people cannot purchase goods and services. People employed in businesses also create goods and services for others to purchase. Sometimes this can include selling directly to the consumer, such as a hamburger chain selling food to a patron. Other times, businesses can sell to other businesses, such as when wholesalers sell goods out of a warehouse to grocery stores. All of these businesses operate under the laws of supply and demand where businesses compete by a combination of offering superior products and lower prices.

Business also drives the economy through investment. People looking to build wealth over time or to generate a stream of income from dividends choose to invest in businesses. Businesses encourage investment by keeping their profit margins large and their cost of doing business low. By doing this or even demonstrating the potential to do these two things, businesses help drive the economy by encouraging investment.

These aspects of business are true of a market economy, an economy driven by people's free choice to produce and consume.

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What is the role of business in the economy?

In any market economy, business plays a huge role.  Business is the engine of an economy.  Business provides jobs that allow people to make money and goods and services that people can buy with the money they make.  Without business, the economy would be very inefficient and/or very primitive.

In any economy, people need jobs.  In any but the most primitive economies, people need to be able to buy goods and services.  Businesses provide for both of these needs.  Most businesses provide people with jobs.  If I open a restaurant, I will need to hire cooks, wait staff, dishwashers, and other people.  My business is providing jobs for many people.  Now imagine how many people get their jobs from large companies.  A large company can provide thousands of jobs. This is incredibly important to an economy.

These businesses also provide the things that people need to buy.  If you need a cell phone, you have to buy it from a business because you certainly cannot make your own. Most people cannot make their own clothes and must buy them from a business.  Most people do not cut their own hair and must pay a business for their haircuts.  Without businesses, people would not have goods and services that they could buy.

Economies can exist without businesses, but they are not nearly as strong.  Imagine an economy where every person works only for themselves.  No one starts a business and hires other people.  This economy would be very primitive as people would only buy and sell things they could make themselves.  Alternatively, imagine an economy where there are no businesses because the government is in charge of the economy.  The government will provide jobs and goods and services, but it will not do so efficiently.  The government might not provide the things that people want.  It might run its factories and other operations poorly because they could not go broke if they failed to satisfy their customers. This would be an inefficient economy.

Business, then, plays a central role in any market economy. It is the engine that allows an economy to run because it provides jobs as well as goods and services.

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

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.

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

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.

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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. 

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

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

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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What is the role of business in the economy of a country?  

In any capitalist economy, businesses play a huge role.  Businesses are the major provider of jobs and the major drivers of economic growth in a typical capitalist economy.

In a capitlist economy, most workers are employed by private businesses.  This means that it is up to businesses to create the jobs that allow a country to grow economically.  If private businesses do not expand and/or if new private businesses are not formed, the country's economy cannot grow.

In this way, businesses are the most important part of a typical capitalist economy.

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