Critical Importance of Entrepreneurship in Local Economic Development: The Evolving Developmental Ontology

Critical Importance of Entrepreneurship in Local Economic Development: The Evolving Developmental Ontology

DOI: 10.4018/978-1-7998-2641-5.ch001

Abstract

In Chapter 1, the author considers the overall evolving ontological significance of entrepreneurship as a mindset in structural developmental change facilitating both local and rural economic development. Here it is illustrated that entrepreneurship itself is demanding new, non-divisive, non-mechanical developmental approaches to local economic development, in the sense that the current concepts which recognize this approach need to be fostered holistically in order to work well in modern economics. It is further conceived that both in local economic development and entrepreneurship, proposals based on indivisible developmental wholeness offer a much more effective way of approaching the general social-economic and rural reality. In subsequent chapters it will be further shown that rural regions can in fact greatly benefit from these notions. The author indicates that some regions are not able to attract investment and ensure sustainable development while regional and rural development agencies with entrepreneurial thinking offer many available strategic options.
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Introduction

The first chapter discusses some ideas aimed at bringing together entrepreneurship and local economic development which is not a coincidence because of their fundamental mutual connections. In this regard the complexity of the overall socio-economic system shall also be approached primarily holistically. It implies a philosophical theory that nature tends to synthesize parts into organized entities and that that determining factors in nature represent a whole as organisms (Smuts, 1927). A similar approach from the same time proved that a cause of a crisis can be any factor, or any group of related factors, in a word, everything that works (Mitchell, 1927). In the holistic approach to the development of entrepreneurship, our attention also focuses on more recent achievements of the International Fund for Agricultural Development which are relevant for the main theme of this book. IFAD’s holistic approach (IFAD, 2019), implies the widest support to services for the development of rural enterprise (UNDP, Netherlands Government, ILO, UNIDO, 1988; Goiburu, 1981). This implies financial and non-financial support as well as appropriate market development services, to which in my opinion post-financial support and consulting for the survival and further development of entrepreneurial ventures should be added. Finally, holism also enables us to comprehensively understand economic development as the study of not just one of its most important parts. In the contemporary context of economic development, we study (i) relationships that arise in connection with the production, distribution, exchange and consumption of material goods and services, (ii) the legal and institutional framework (North, 1991, p.108) for the operation of economic entities and the conduct of economic processes, and (iii) the mechanism of functioning of a market economy with a set of basic measures of national economic policy for achieving the goals of socio-economic development.

An economic system includes business entities that function in a certain legal and economic environment. It is conditioned by international economic - legal enactments, and indeed by national constitutions as a basic act of each state, then individual laws and regulations which regulate the behavior of market participants. In addition modern development concepts are influenced by the following institutions1 formed and supported at different levels of organization:

  • Municipalities, districts at local level;

  • Regions and provinces at regional and provincial level;

  • Countries at the national level;

  • Regional integration at supranational level: EU, OECD2;

  • UN, World Bank3, IMF4, WTO5 at international and global level6.

When considering economic development, many authors especially emphasize the importance of interaction between individual subsystems within a large social system. It is necessary to add interaction with supranational systems. In terms of the degree of impact on the economic subsystem, it must be kept in mind that it is possible to generalize the significance of operation of other systems and subsystems. Certainly this is true, with the remark that political and legal subsystems have a direct impact on the nature, operation and development of the economic system. It is also very characteristic of the educational system's impact on the economic system, since the qualification of a population is a major factor of economic development, which will be discussed later in a rural and entrepreneurial context. When a high level of economic development and the standard of living has been achieved there is a change in mentioned regularities, so the direction of operation and influence works both ways, as the development of the economic system leads to the development of these subsystems. Let us underline similar observations for the remaining subsystems in order to make our analysis more complete: the direction and impact of the health, cultural and scientific research system at a high level of economic development means that the institutions of the economic system and the enterprise7 subsystem can allocate more resources for the incremental evolution (North, 1991, p.97) of these subsystems.

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