Entrepreneurship: The Critical Factor for Australia’s Development

Entrepreneurship: The Critical Factor for Australia’s Development
Entrepreneurship is the backbone of a thriving economy. The Government of Australia is in the process
of developing policies to provide a boost to the entrepreneurial capabilities within the country. (Office of
Chief Scientist, Australian Government, 2015) Development of entrepreneurship is critical to the
development of the Australian economy. However, there are some hindrances that inhibit the
development of entrepreneurial capabilities within the country.
Small businesses are the primary driving force of growth in Australia.. (Bakhtiari, 2017) 80% of
employment in Australia is provided by Australian forms. Growth in the small business sector is an
important factor in gaining a high level of employment growth in the Australian economy. According to
Connolly, Cava, & Read, (2015), small businesses provided for 43% of the total employment in the non-
banking sectors of Australia. Entrepreneurship can help increase the demand for labour and
consequently, an increase in wages.
The productivity levels of labour in Australia have peaked and have not been growing in the past to
desired levels few years. The OECD Economic Survey for Australia has strongly recommended a focus on
increasing the productivity of workers, in order to increase the wages of the workers. (Organization for
Economic Co-operation and Development, 2017)Wages in Australia have peaked in the recent past and
increasing the productivity levels of the workers is important in order to push the overall wages higher.
According to DeVera, (2016) entrepreneurship is a critical factor in increasing the average productivity of
labour in Australia. This is particularly true of knowledge and creativity based enterprises.
One of the crucial functions of entrepreneurship is to create capacities. When an entrepreneur seeks to
manufacture any product or a service provider seeks to provide a service, they must bind together all
other factors of production such as land, labour and capital (or technology). As result, the resources of a
country are put to productive use. Thus, entrepreneurship is a thread that binds the various other parts
of an economy. Thus, entrepreneurship leads to what is known as “capital formation” or the formation
of productive capacity. In this process, the factor markets or the markets for factors of production
receive a boost. This may also have spill-over effects in the form of development of human capital.
“Human Capital” is described as the inherent capacity of labour which is more than just the physical
measurement of the output generated by labour. It refers to the intangible assets of labour such as
creativity, knowledge, skills etc. (Samuelson & Nordhaus, 2006)
Australia is a developed nation. Yet, there are regional imbalances that are widespread, with inequality
increasing even further. The Aboriginal and Torres Strait tribes do not have the opportunities available
as a citizen from one of the well developed parts of the country such as the ACT region. (Organization
for Economic Co-operation and Development, 2017) It is natural for entrepreneurs to seek alternatives
that are most efficient. For example, a wine producer would seek to produce products at the lower rates
than imported wine to survive in the domestic markets. Hence, they would naturally diversify the
industry in areas where the cost of land is cheaper and where the grapes are available at the cheapest.