Promoting Entrepreneurship for Development: A Study based on Status of Employment Data in Sri Lanka

Abstract

Currently a high emphasis has been given to promote entrepreneurship as a policy instrument to acquire a rapid increase in employment generation, income creation and poverty alleviation in almost all the countries. Accordingly, Sri Lanka too has attached a considerable importance to promote this area in formulating its development policies, and already taken a number of steps for creating more entrepreneurs. However, in most of the deliberations, the need of the entrepreneurial development is discussed theoretically without even reviewing the success so far achieved based on the relevant national wide data in the economy. Nevertheless, this study, going against this conventional wisdom, attempts are made to analyze more rationally why entrepreneurship should be promoted based on the analysis of status of employment data available in Sri Lanka with catching its development so far achieved. Accordingly, the study found that the formal sectors’ labor absorption has reduced from 64.7% in 1991 to 58.7% in 2013 while that of informal sector has increased from 35.6% to 41.3% in the corresponding period on account of not expanding the entrepreneur category in the employment structure of the economy, beholding a higher level of unemployment for the more educated youths as substantiated by the available official data which indicates that open unemployment for the educated youths is as twice as that of lower level educated persons. The current study shows that percentage of the size of employers or the successful entrepreneurs compared to those of other sectors’ has been stagnated at inadequate low level around 2 to 3 percent of the employed over the study period, and this fact highlights the failure of the country’s attempts so far made to increase entrepreneurs, and why entrepreneurship should be really promoted in order to increase employment generation, income growth and poverty alleviation for the economy. Also, the study concludes suggesting more elaborative ways and means for increasing the size of the volume of employers or successful entrepreneurs to acquire a rapid increase in employment generation, income creation and poverty alleviation for the economy.