The Contribution of Micro-enterprises to Economic Recovery and Poverty Alleviation in East Asia

This paper examines the economic and social crisis that afflicted East Asia from mid-1997 and the contribution of microenterprises to economic recovery and poverty alleviation. Microenterprises provide income and employment to a significant proportion of rural and urban workers. Microenterprise development with appropriate microfinance support can contribute to poverty reduction, womens empowerment, employment generation and private sector enterprise development. The paper highlights two types of microenterprises, namely, livelihood enterprises which provide livelihood to the entrepreneur, and growth-oriented microenterprises, which have the potential for growth and employment generation. It is important that these two types of enterprises are recognized and their particular requirements identified. Study findings include:

• Focus on livelihood enterprises can assist in poverty alleviation in many of the East Asian economies adversely affected by the regional crisis;
• Growth-oriented microenterprises, however, represent a better prospect for the longer-term development of  regional economies;
• Access to finance can play an important role in the development of livelihood enterprises;
• In the case of growth-oriented enterprises, access to finance is important along with the need to gain access to skills upgrading and technology.