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YAO Zhongqiu: The New Economy Facilitates the Emergence of Entrepreneurs.
 
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The New Economy Facilitates the Emergence of Entrepreneurs

 

By YAO Zhongqiu, Professor of Beihang University

Translated by MA Junjie, Project Researcher, Unirule Institute of Economics

 

 

Professor SHENG Hong’s presentation on his model of estimating the New Economy’s contribution to growth gave us insights from a macroeconomic perspective. Now I’d like to present the micro aspect of this issue, which may be helpful for us to understand the mechanism of the New Economy.

 

 

I’ll speak on entrepreneurship and entrepreneurial capacity, or more directly, on entrepreneurs. What I propose is that the reason why the New Economy, or the Internet-based economy, brings growth is because it facilitates the emergence of entrepreneurs.

 

There is extensive study on economic growth. Many economists have come up with their own theories, such as Adam Smith’s theory on how division of labour facilitates growth. And there are other economists who emphasise technological advances, human capital, and organisational changes. I did some research years ago on the Austrian School of Economics, and how entrepreneurs brought about growth. Therefore, I’ll focus on this theory.

 

There is no doubt that entrepreneurs and their innovative activities are the main driving force of economic growth. I can’t say they are the only driving force, since calling something the sole factor resembles preaching. When we look at many present debates in the economic circles in China, they are debates between preachers, which is not beneficial to our understanding of economic activities.

 

No matter what, entrepreneurs are a very important factor in economic growth as economic activities concern human action. According to the Austrian School, men play an active, productive, and innovative role in the economic process, and by doing so, they are considered entrepreneurs. In a sense, anyone can be an entrepreneur, and everyone has some entrepreneurial qualities. Of course, we must admit that some people’s more enterprising, and they tend to be more of entrepreneurs than others. As long as they possess factors such as technology, labour, and resources, they can move the economy forward. Without them, economic development is impossible.

 

When we look at economic growth over different historic periods and economic entities, if there are any differences, they are mainly differences concerning entrepreneurship. For example, the environment for entrepreneurs to succeed in different economies and different times has a very important influence on the performance of the economy.

 

When we have this discussion, maybe we could use a concept such as entrepreneur index or entrepreneur ratio, which is the number of entrepreneurs compared to the whole population, or the adult population. As Mr. LIANG Chunxiao suggested that we could use the “density of online merchants”, this entrepreneur index should also be useful. With this concept, we could compare over time and space, and reach conclusions about when and where the environment is beneficial to entrepreneurial success.

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