Making the Economic Development Connection

This paper argues that although economic development policy makers think of microenterprise development (MED) as a poverty alleviation strategy, it is also an important component of economic development strategy. The paper lists the following ways in which MED can contribute to economic development:

• MED supports business creation;
• Microbusinesses create employment for the owners and for others;
• Many microentrepreneurs belong to the “creative economy” that is an engine for progress in many communities;
• Microenterprises can be the “seedbed” for future entrepreneurs.

The paper lists strategies that microenterprise organizations use to support economic development. These include:

• Offering entrepreneurial readiness assessments for clients;
• Providing business development training and consulting services;
• Offering loans, awards and loan packaging services to help entrepreneurs access capital;
• Providing coaching and mentoring services, and access to business networks;
• Developing specialization in sectors;
• Contributing to the development of entrepreneurship development programs for entrepreneurs in a region.

The paper concludes with tips for funders who want to use MED as a tool for economic development:

• Invest in the documentation of outcomes and impacts of MED from an economic development perspective;
• Invest in program development that increases the economic development effectiveness of specific organizations;
• Connect microenterprise grantees with others in the economic and enterprise development fields.