The 2010 edition of the Annual Bank Conferences on Development Economics (ABCDE) just wrapped up. Here are all the materials from the conference, including a webcast of the keynote given by Nobel Laureate Elinor Ostrom. Also make sure to check out Abhijit Banerjee’s presentation, particularly slide 7, where he argues:
- The poor are not particularly well-suited to be entrepreneurs: They neither have the risk bearing capacity nor the human capital;
- Nor will anyone give them enough capital to really grow the businesses;
- This suggests that the main source of dynamism has to be growth of medium to large firms.
From the Bank’s PSD blog.
Banerjee makes a good point. It seems we have confused self-employment with being an entrepreneur. This leads to incorrect conclusions about the economic growth potential of people who simply have no other livelihood option but to work for themselves. Microfinance can do a lot to improve their lives (e.g. smoothing out irregular incomes, dealing with shocks) but we shouldn’t expect to see a macroeconomic impact.