Academic journal article Journal of Small Business Management

Micro-Enterprise Growth: Operational Models and Implementation Assistance in Third and Fourth World Countries

Academic journal article Journal of Small Business Management

Micro-Enterprise Growth: Operational Models and Implementation Assistance in Third and Fourth World Countries

Article excerpt

MICRO-ENTERPRISE GROWTH: OPERATIONAL MODELS AND IMPLEMENTATION ASSISTANCE IN THIRD AND FOURTH WORLD COUNTRIES

Micro-enterprise, or the development of small scale income-generating activities, was one focus of major international development for the 1980s (Anderson 1982). Continuing into the 1990s, and given interest and support by international voluntary organizations, foundations, and government agencies, third and fourth world countries are addressing their needs for stimulating and fostering economic growth through such a focus on micro-enterprise (Tendler 1987). The change in focus--from large scale industrialization and import protection programs initiated in the 1960s and 1970s to smaller scale economic initiatives that are more directly related to the poor and their economic capabilities and needs--is a major theme of international assistance for developing countries (Kristof 1985).

Danziger and Weinberg (1986) stated that, in spite of twenty years of increased spending, the level of poverty in underdeveloped countries has not declined. Education, employment, and training initiatives have provided only small gains. They concluded that not enough is known about how to improve the education and employment prospects for the poor, and that international assistance to developing countries needs to address more directly the economic needs and potential for self-improvement programs for the poor. Alternative strategies are needed to reduce unemployment and redistribute economic opportunities and benefits among regions and social groups within developing countries (Miller and Kirschstein 1988).

A micro-enterprise has been defined in a variety of ways using such factors as the number of employees, the volume of sales, the capital value of an endeavor, and the level of capital costs per workplace (Harper 1984). Recognizing that an exact definition may vary depending upon the culture and country involved, a working definition for purposes of this article is that a micro-enterprise is an economic endeavor which is: (1) operated and managed by one or two people, (2) usually based within a family, and (3) usually functions within the informal sector of the society outside of bureaucratic regulations and government controls. Typical micro-enterprises include such income-generating endeavors as fruit/vegetable vending, dressmaking, wood and metalworking, mechanical and electrical repair, cloth making, and small food services (Miller and Kirschstein 1988). These income-generating activities, which include both service and manufacturing, typically address the consumer needs of the poor.

The interest in and importance of micro-enterprise development among economic planners and international assistance agencies stem from the need for more direct assistance to the alleviation of poverty (Neck 1977). In contrast to "top down" economic planning and implementation, micro-enterprise programs are based on several "bottom up" development premises which include the need for: (1) self-employment opportunities among the poor; (2) employment which is labor intensive rather than capital and education intensive; (3) economic growth based on small scale business initiatives; (4) an economic base from which to foster business expansion; (5) the use of natural resources in the economic development process; (6) development strategies that assist in the transmission of economic initiatives and opportunities from the informal to the formal sector; (7) economic development opportunities for indigenous populations as opposed to "alien minorities" within a developing country's social and economic structure; (8) poverty alleviation through new sources of income; (9) "an incubator environment" from which indigenous services and technology can be nurtured for expanding a country's economic base; (10) technology adaption to indigenous resources; and (11) development of entrepreneurial skills and talents (Harper 1984, James and Rose-Ackerman 1986). …

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