Why has the shift from an industrial-based economy to a service and knowledge-based economy increased entrepreneurship?

The shift from an industrial-based economy to a service and knowledge-based economy has indeed led to an increase in entrepreneurship, primarily because service-oriented businesses often require less capitalization compared to traditional manufacturing ventures.

In a service-based economy, many businesses can start with minimal upfront investment, utilizing existing skills and knowledge rather than needing large amounts of capital for equipment, facilities, or inventory. Entrepreneurs can often launch their ideas from home or with low-cost resources, which makes entering the market more accessible. This ease of entry encourages individuals to pursue entrepreneurial ventures, leading to a greater number of startups and innovative services being introduced to the market.

In contrast, manufacturing typically involves hefty investments in machinery, materials, and labor, creating higher barriers to entry. This can limit the number of new businesses entering the field, as the initial costs may be prohibitive for many aspiring entrepreneurs. Therefore, the adjustment towards a service-driven economy allows for an environment that fosters and accelerates entrepreneurial activity.