Microenterprise in the First and Third Worlds

Sparked by examples from the third world, hundreds of microenterprise programmes have been started in the first world. Will they be successful? This paper reviews the evidence and concludes that microenterprise development is more difficult in the first world. For example, the microenterprise sector in the first world is smaller because most people can get wage jobs and because of the public safety net. Unlike third-world entrepreneurs, first-world entrepreneurs are more often constrained by lack of savings rather than a lack of credit. Most microenterprise programmes, however, can do little to facilitate savings. Because many first-world entrepreneurs also lack skills, most first world programmes focus on training. The cost-revenue structure of this training, however, is not sustainable. The paper offers several suggestions for how to address the challenges of microenterprise development in the first world.