Microenterprise and the Economic Development Toolkit: A Small Part of the Big Picture
Vol. Volume 5, Number 3 December/2000
Lisa J. Servon and Jeffrey P. Doshna
Growth in the number of U.S. microenterprise programs has been tremendous in recent years. In many places, these programs are being implemented with economic development goals in mind. However, although growth in this strategy has been great, the number and size of programs is very small relative to other economic development strategies. The goal in this paper is to determine the appropriate role, if any, for the microenterprise strategy within the larger field of economic development. We argue that the microenterprise strategy is appropriate economic development for many regions, and that this strategy performs best when it is integrated into a larger plan for economic revitalization. However, many economic development planners and policy makers are either unaware of the microenterprise strategy or fail to appropriately incorporate it into their overall economic development plan. Although we find that the cost per direct job created for microenterprise development is comparable to traditional economic development strategies, we also argue that traditional indicators fall short of describing how microenterprise programs contribute to economic development. As a result, more appropriate evaluation techniques must be developed and used. Based on our findings, we recommend a strategy that consists of: educating economic development planners and policy makers; integrating microenterprise development into a larger economic development plan for a distressed region; and evaluating the strategy using appropriate measures..
Microenterprise development, local economic development, qualitative analysis.