Basic Entrepreneurship: A Means for Transforming the Economic Lives of the Poor?

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The world's poorest people typically lack both capital and skills. They tend to work as in occupations such as agricultural labor or subsistence cultivation which are often insecure and seasonal in nature and which do not require capital or skills. The non-poor, in contrast, tend to be engaged in secure wage employment or to operate their own businesses. Consequently, most anti-poverty programs attempt to target the poor to help them overcome either a lack of capital and or skills. Notable policy interventions along these lines include microfinance programs on the capital side, or vocational training and adult education on the skills side. Yet it is uncertain whether many of these programs are, in fact, able to transform the occupational choices of the poor, and thereby enable them to permanently exit poverty. Occupational change is central to development and growth, but it is the result of a complex set of interactions between individuals, markets and the state, and it is therefore difficult to credibly link occupational change to a lack of capital and skills.The proposed research examines a new set of interventions, pioneered by the world's largest NGO BRAC in Bangladesh, which simultaneously tackle the capital and skills constraint in an attempt to encourage occupational change amongst the world's poorest women. We use randomised control trials of this type of program in Bangladesh, Pakistan and India to look at whether providing capital and skills can encourage basic entrepreneurship. The issue at hand is whether one can create successful female entrepreneurs - who acquire skills and make use of productive capital - out of poor women who started out with neither. Key to this question is whether asset and skill transfers can induce the poor to alter their occupational choices and permanently exit poverty, as opposed to simply enabling them to increase their consumption in the short term. These questions are highly salient as the world is littered with examples of anti-poverty programs, which despite their best intentions, fail to have any appreciable impact on their intended beneficiaries. The proposed research thus speaks directly to the first overarching question posed in the ESRC-DFID Joint Fund for Poverty Alleviation Research 2012-13 on finding effective means to allow the poorest to exit and stay out of poverty. It also addresses directly the crosscutting issues on structural inequalities (particularly as regards gender) and measurement and metrics (particularly as regards measuring empowerment and the social dynamics and general equilibrium effects induced by the program). The interventions we examine are fundamentally about empowering the poorest women within rural communities both socially and economically so that they can exit and stay out of poverty. The proposed research begins with an on-going large randomized evaluation of the ultra poor program which is being carried out jointly by the Principal Investigator, Professor Robin Burgess, and the world's largest NGO, BRAC (Bandiera et al, 2012). It then extends to two further large randomized evaluations inspired by this BRAC flagship program. A randomized evaluation of a combined livestock and microfinance program which is being implemented by BRAC in rural Uganda. And an evaluation of the Punjab Economic Opportunities Program, being implemented by the Government of Punjab in Pakistan, which attempts to enable poor, rural inhabitants to start small livestock businesses by providing them with livestock assets and complementary training. The research will thus tell us something about whether the basic entrepreneurship idea, which was pioneered by BRAC in Bangladesh, can be replicated elsewhere.