When population increases exponentially yet job creation happens only marginally, unemployment will remain growing and further burdening affected families, severally, and society, collectively.
Public policy efforts to tackle unemployment by increasing government spending also risk plunging the affected economy into inflation triggered by more money in circulation.
Also trying to fix the unemployment problem through Foreign Direct Investment does, to some degree, jeopardize state interests because some of the foreign direct investments require that the country forgo certain interests, either socioeconomic, cultural or political in a bid to favor targeted investors.
What remains the best value-creating approach to tackle unemployment and challenges therefrom is entrepreneurship. Entrepreneurship helps society organize resources to produce goods and services of value to society.
Since entrepreneurship employs both human and non-human capital to produce goods and services needed by society, it happens, by default, for entrepreneurs to find novel ways of deploying resources to generate the intended and predetermined value for target consumers.
In their entrepreneurial pursuits, entrepreneurs are inclined to minimize costs of production and losses with a chief aim of increasing returns on investment.
The result of inclination to profit maximization through reduction of costs of production and losses is the prevalence of creative mechanisms for producing goods and services.
Such creative and novel mechanisms for production and rendering of goods and services is what is referred to as innovation. Innovations create value by creating solutions to specific problems faced by a given segment of the population.
Some innovations; however, create a completely new segment of consumers by turning already existing but expensive inaccessible and complex products into affordable accessible and easy-to-use (simple) products for consumers who needed them all along but could not afford them given their prices and cost-to-access. These innovations are what is called Market Creating Innovations.
A historically visible example of Market Creating Innovations is the development of the Model T car by American entrepreneur- Henry Ford. Before developing the Model T, cars were a luxury of the wealthy minority of the country’s population. What Ford did was build a car that was easy to use, affordable and accessible to a majority of the American population who, formerly, could not afford to buy cars.
Given the fact that the segment of the population served by Market Creating Innovations comprises of the largest number of people, market creating innovations produce large scale opportunities for society as a large portion of the available labor force is deployed to serve in building the necessary infrastructure to enable production of products, serving within the new market segments (those created through market creating innovations) and other businesses formed as forward and, or backward linkages to the newly formed markets.
From this, new job opportunities emerge as the business formed hires labor to help execute on production, distribution and all other duties within the business. Equally, new businesses resulting, as forward and backward linkages, from the market creating innovations employ people to address consumption set off by the innovation.
Since market creating innovations serve a large number of people and such innovations propel the ecosystem to produce many other products and services, it is of vital importance for public policy strategy seeking to address the rising unemployment problem to consider making objective investments into market creating innovations.
The essence of state-led investment into market creating innovations is to speed up the emergence of businesses which address problems faced by the majority of the country’s population- who are, in most cases, the least income earners- and, for that reason, create numerous job opportunities, improve people’s lives by bringing, within their reach, products and services which help them better their household incomes either by relying on such innovations or any other such developments existing as a culmination of market creating innovations, thus causing substantial ripple effects within the economy.