Urban Research Monitor

It is now standard practice for urban communities to include microenterprise programs in their toolkits for addressing poverty and economic development. Microenterprise programs assist poor people—usually through small loans and technical assistance—to start or expand their own microbusinesses. These microbusinesses generally are in service sectors with extremely low barriers to entry.

The concept originated in developing nations, where microenterprise programs have given large numbers of the poorest of the poor the opportunity to operate their own businesses with minimal expenditures of public funds. Now, almost 15 years since the concept was first introduced in the United States, more than 200 microenterprise programs across the nation have served more than 200,000 people, loaned more than $44 million, and assisted more than 54,000 businesses in disadvantaged communities. These are impressive-sounding numbers, but the question for the objective urban scholar is, How effective is this strategy for actually combating poverty? Some researchers are concerned that these programs may help only small, nonpoor business owners who are having trouble obtaining conventional financing.

Two new reports analyze the role of microenterprise programs in alleviating poverty. "The Material Conditions for Microenterprise Programs in the United States and the Third World," by Mark Schreiner, assesses the difference between microenterprise programs in the United States and those in the developing world. Schreiner argues that economic, cultural, and governmental factors make the task of microenterprise programs in the United States more difficult than in the Third World. In "The Dimensions of Microenterprise: A Critical Look at Microenterprise as a Tool To Alleviate Poverty," Louise A. Howells also takes a critical look at the ability of microenterprise programs to lift Americans out of poverty. Howells posits that these programs are likely to reach only those people who already have the personal skills and resources to start their own businesses—skills that few welfare-dependent people possess.

Previous                 Contents                 Next