No one can deny this, startups are so important for the economic growth of a country. Any country that has a proper startup culture is making major strides in the world. Governments all over the world are realizing the importance of startups and started to implement measures to nurture startups.
Startups are ventures that bring innovation into society and bring new products and services into the commercial market. Startups are especially very important for developing countries because they contribute to economic growth in multiple ways, as we will find out. Developed countries around the world have benefited greatly from startups and have seen immense growth, development, and innovation just because of startups.
The question here arises is how do startups contribute to the economic development of a country? That is what we have discussed below, the role of startups in the economic development of a country:
Generate jobs
Business activity in any form helps to generate more employment opportunities. Every startup or venture that is started needs people to run the affairs of the company. As a startup opens, it opens up various job opportunities for the people and this is the biggest contribution of startups to economic development. As more employment opportunities are created, the rate of unemployment is reduced in society, and many people get a source of income for themselves, reducing crime in society, and helping in the circulation of money in society.
Startups in all forms create jobs. Whether it is an online startup like CamSurf, an offline startup, or a startup with low potential, it is still able to create various employment opportunities for the people in society.
Contribute to the GDP
GDP or Gross Domestic Product is one of the major contributors to boosting the economic growth of a country. In a country like India, startups play a significant role in increasing the GDP and ultimately, the economy of the country. When startups are encouraged, promoted, and offered various incentives, they are able to generate huge revenue in the domestic market. This revenue flows around in the market which ultimately helps the economy.
Develop new and innovative technology
You can consider startups as the centers of innovation and development because these startups always bring unique and innovative products to the market. The minds behind these startups are some of the brilliant minds of society who are constantly striving to develop new technology and bring innovative products into the market.
Due to their unique thinking and vision, startups work on newer technology that helps to create new industries over time which boosts the economy. For instance, the introduction of digital and internet banking to the conventional banking system made the whole system much better. Similarly, blockchain is a new technology that will change the way how transactions are made.
Create new markets
Since startups are known because of their ability to introduce unique and innovative products into the commercial market, they sometimes end up creating whole new markets which opens up so many economic possibilities. Startups regularize and develop markets that were previously unorganized and weren’t given much heed. For instance, startups like Omegle, Uber, Zomato, Airbnb, Paytm, etc have created whole new markets which were previously unorganized and not even explored.
Make the market highly dynamic and competitive
Startups also make the market highly competitive. By introducing unique products, new technologies, and new ways of doing various operations, they force competition in the market. Startups compel old players into the market to re-think their product pricing, marketing strategies, and business operations and also make consumers more conscious about the products and services that they should be getting at competitive prices.
This makes the economic system more dynamic and adds competitiveness to the economic system which keeps the economy healthy and dynamic. Everyone in the market uses their innovations to beat their competitors by introducing better products and services which helps to improve the economy.
Attract foreign investment
Startups that are performing well, have a unique product or service or accept outsourcing services are able to attract foreign investment. Whether it is in the form of direct investment from foreign investors or performing outsourcing tasks for foreign companies, startups attract foreign investors due to which more foreign money is circulated and distributed in the country which is always good for the growth of the Indian economy. Only a handful of ventures can attract foreign investment, and startups are certainly one of them.
