Start-ups: Contributing to Economic Growth
Start-ups: Contributing to Economic Growth
Startups, though small in scale, have considerably gained a positive repute especially in these modern times of technological transformation and ever-shifting consumer behavior. Innovations in technology have paved the way for the creation of new products and services and broadening of market reach, which have greatly enabled startups to thrive. The introduction of new products and services, along with the unique experiences and value for money that they bring, has been consistently shaping the buying behavior of consumers as a result. This has created a more favorable environment for startups, helping them grow faster than ever before.
With the success of startups follows economic growth, both locally and globally. The “2022 Global Startup Ecosystem Report,” released by Startup Genome and the Global Entrepreneurship Network, showed $6.4 trillion in global startup economy value creation. It also ranked Silicon Valley, New York City, London, Boston, and Beijing as the top five ecosystems, almost the same ranking as in 2020 and 2021. And with 77,047 startups, the United States is the leading country worldwide.
Startups for a better economy
As startups continue to flourish with modernization and creativity in the coming years, this signifies an immense potential for startups to change the world’s economy. They can be developed anywhere and from any idea, which can turn into a big innovative solution; hence, the promise of changing the future especially of countries needing further development.
One of the many advantages startups offer for the economy is employment creation. Startups generate new job opportunities, reducing unemployment rates and increasing disposable income for individuals. In fact, global data shows that startups are creating more jobs than larger companies in any country. In the United Arab Emirates, approximately 95% of firms are SMEs or startups, and they account for almost 50% of the country’s GDP according to the latest Global Startup Ecosystem Report.
Innovation is one significant aspect of startups particularly tech startups. Founded on innovative ideas that can disrupt existing markets and launch new ones, these startups tend to develop new products and services that revolutionize their respective industries. E-commerce, Fintech, and blockchain are just a few of the tech sectors around which startups are seen to grow rapidly starting this year. The World Economic Forum (WEF) even estimates that 70% of new value created globally in the next decade will be based on digital business models.
“In 2023, for the first time, more than half of GDP will be driven by ‘digitally transformed’ enterprises,” WEF said, citing market and consumer data online platform Statista. “PWC (PricewaterhouseCoopers) projects that gains from artificial intelligence alone will contribute $15.7 trillion to the global economy by 2030,” it added.
Startups introduce competition into the market, and this can drive down prices and increase quality in the long run. This benefits consumers and lead to increased consumer spending, which is a critical driver of economic growth. And when more revenues are generated domestically by startups, consumer capital will also move around the country.
Competition, in essence, also produces benefits for startups. Because of competition, startups try their best to be ahead of the curve by considering out-of-the-box solutions, in turn stimulating innovation. Ironically, competition at times spurs alliances in terms of sharing of technology and research and development, setting the stage for future mergers and acquisitions.
At the very heart of startups are entrepreneurs who are big risk-takers. These entrepreneurs can inspire others to start their own businesses, which can lead to a culture of entrepreneurship and innovation. And it goes without saying that entrepreneurship boosts economic development in more ways than one. Number one of which is through boosting tax revenues. As startups grow and become profitable, they contribute to tax revenues, which can be used to fund public services and infrastructure.
With digital transformation, it is expected that startups will continue to be innovative and competitive. Ultimately, as the number of startups swells in the succeeding years, they will have a much greater impact not just on consumers’ lives but on various economies as well.
Technological innovations and investments take center stage at AIM Global 2023, giving more focus to the invaluable role tech startups play in the global economy. AIM recognizes that startups have been instrumental in the economic recovery since the pandemic, and thus will provide the best platform to highlight this as well as offer solutions to the present and imminent challenges in the startup industry to help it further grow.
