How Governments Can Foster Entrepreneurship And Encourage The Creation Of Wealth

How Governments Can Foster Entrepreneurship And Encourage The Creation Of Wealth

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#1: Describe several ways that governments can foster entrepreneurship and encourage the creation of wealth.

Governments can inspire both the creation of wealth in an economy and entrepreneurship within that economy as well. Using different policies, they can provide incentives for entrepreneurs to start businesses, such as lowered taxes, private ownership, and less risk/corruption while starting a business. This inspiration leads to growth in an economy and a positive increase in entrepreneurship.
The government can minimize spending/keep taxes and regulations to a minimum, which are policies that tend to favor businesses. By doing so, the government can foster entrepreneurship and encourage the creation of wealth. In fact, if a government were to lower the corporate tax rate, it would more than likely lead to economic growth (creation of wealth) and job creation primarily due to the fact that companies have more money to invest in labor, resources, etc. According to a peer-reviewed study by former head of Obama 's Council of Economic Advisers Christina Romer, “A tax cut that increases corporate or personal income equivalent to one percent of GDP increases GDP by between 2-3%” (Romer). By creating a tax cut, businesses were able to operate more efficiently and were able to invest more into the economy, resulting in the creation of wealth in the form of an increase in Gross Domestic Product.
Another way for the government to actively promote Entrepreneurship is to actively allow the private ownership of businesses. According to Osmond Vitez, a corporate accountant and author, “Business owners often find more success in capitalistic economies because private ownership allows individuals to produce various goods or services and k...

... middle of paper ... named Mike Scanlin who decided to outsource his small business’s programming operations. “Hiring programmers in nearby Silicon Valley would have cost him $600,000 over the course of a year. Instead, Scanlin hired programmers in Eastern Europe for only $37,000.” (Pagliery) Although outsourcing jobs may be bad for the American people and the country as a whole in terms of loss of jobs, it is immensely cheaper to outsource and take advantage of foreign labor at reduced costs for businesses. This increases efficiency and allows businesses to grow with their excess funding.
In conclusion, outsourcing has its own pros and cons. While it results in domestic job losses and lower quality goods, it is also significantly cheaper to outsource and it reduces domestic pollution. As with anything, outsourcing has its tradeoffs but is overall an important aspect of an economy.

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