Question

Experience and formal educations were often used as a proxy for (entrepreneurial) ability. Briefly discuss the advantages and disadvantages of using each of them. How does your answer help explain why empirical studies of entrepreneurial choice often include both measures (such as year of schooling and years of work experience)?

Answer 1

The problem presented in this question is not only limited to Bangladest only, there are many more countries especially in South Asia which is experiencing the same problem. It is becaause of the fact that in today's competitive world everybody wants to have the best with itself, but it comes at a cost. We know the fact that the education system of almost whole of South Asia is not compatible with th present needs. That's why countries like Bangladesh, Indisetc. are going through the same problem.

A) Just like the skill developmental programme initiated by the indian Government, there is a need to identify the reason behind the domestic population is not able to find jobs in the country. In case of India, it was the lack of proper training and stuff which was rectified by schemes like Prime Minister Skill Developmental Programme. If the same is in Bangalore also, they must also do the same to rectify this problem.

B) An improvement in productivity will definitely b accompanied by rise in income as well as price levels which means that more people are getting employment in the country leading to a definite price rise in the economy and with GDP growth, inflation is complimentary but in a controlled value, too much inflation in an economy is bad. Real GDP will also take a surge if more and mor people are able to find jobs because the increasing demand (as more and more people starts to earn there would be more than usual demand) will chase the constant supply and hence this will motivate the producers to produce more ultimately resulting in the GDP increment in real terms.

C) A rise in income will always result in rise in savings because when Income riss savings also rises (due to the concept of marginal propensity to consume). With the rise in savings there will be individuals who would look to lend their savings in lieu of earning market, more than the banks which requires a collateral in case of lending. But this also means that there are chances of more and more people being exploited by the private lenders.