How does entrepreneurship result in increasing the spectrum and scope of economic activities?

Entrepreneurship largely promotes the economic development of a country. Entrepreneurship helps in the diversification of economic activities. This diversification is felt across geographical, sectoral and technological scope. They break the vicious circles (of low level) on the demand side and the supply side. For instance, if the demand on the domestic front is low, production and employment remains low, which further results in low income and thereby, low demand. Entrepreneurs can break this cycle by directing production towards exports. Similarly, if the supply is constrained by, say, absence of resources, the entrepreneurs can increase the production capacity and if required import the required resources and raw materials or technology.

In addition, entrepreneurs can also bring about positive sectoral changes in the economy. Entrepreneurs diversify their activities from the stagnant sectors to the new and upcoming sectors. This diversification of activities brings about a transformation in the economy and move it towards the path of development.

Entrepreneurship largely promotes the economic development of a country. Entrepreneurship helps in the diversification of economic activities. This diversification is felt across geographical, sectoral and technological scope. They break the vicious circles (of low level) on the demand side and the supply side. For instance, if the demand on the domestic front is low, production and employment remains low, which further results in low income and thereby, low demand. Entrepreneurs can break this cycle by directing production towards exports. Similarly, if the supply is constrained by, say, absence of resources, the entrepreneurs can increase the production capacity and if required import the required resources and raw materials or technology. 

In addition, entrepreneurs can also bring about positive sectoral changes in the economy. Entrepreneurs diversify their activities from the stagnant sectors to the new and upcoming sectors. This diversification of activities brings about a transformation in the economy and move it towards the path of development.

Development does not mean only the betterment of existing but it means the overall betterment across the geographical, sectoral and technological scope. Entrepreneurship results in diversification of economic activities by creating employment, business opportunities, stabilising the demand and supply factors as underdeveloped countries caught in the vicious cycle of the demand as well as supply side.

Thus, it helps to overcome from this situation. GOP originates from Industry and services increases. Entrepreneurs through their decisions to divert from the stale sectors and invest in green field sectors, bring a virtual transformation of the economy from underdeveloped to developed status. Thus, we can say entrepreneurship results in increasing the spectrum and scope of economic activities.