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

Lead Research Organisation: London School of Economics & Pol Sci
Department Name: STICERD

Abstract

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.

Planned Impact

The proposed research offers the opportunity to validate a major new idea for confronting extreme rural poverty where literally millions of women are trapped in dead end occupations where they labor for others. The fundamental purpose of the proposed research is to provide academic and policy audiences with a solid evidence base on the potential of basic entrepreneurship programs pioneered by the world's largest NGO BRAC to permanently lift very poor women out of poverty. A range of actors from NGOs to governments potentially interested in implementing these types of program will draw from the evidence base that the proposed research will build. The fact that the original basic entrepreneurship idea originated in the Bangladesh will also give the research findings particular resonance. By targeting a wide range of policy audiences and ultimately political actors within developing countries the proposed research can promote basic entrepreneurship as a potential means of lifting the world's poorest women out of poverty.

Beneficiaries of the research proposal will gain an understanding of how programmes providing combinations of capital and skills can affect the long term economic opportunities of the poorest women within rural societies. The study will draw parallels across the three different studies and this evaluation will help shape a policy idea with a potentially wide set of country applications. The research will shape the value and importance given by policy audiences to programs to basic entrepreneurship.

The primary methods of disseminating the body of knowledge gathered by the Principal Investigator will be via the media and through presentations at in-country and international conferences and seminars aimed at academic and policy professionals engaged in international development. Much of the research will also be available to academics and practitioners through publication within academic journals as well as in the form of policy briefs and other synthetic documents. Additionally, continued collaboration between BRAC, the International Growth Centre (IGC) and the Government of Punjab through joint seminars conferences will help to disseminate findings from these studies. The Principal Investigator has already engaged in these types of activities with these partners in the past and can build upon this relationship to disseminate findings from the current studies. The Principal Investigator will also present finding to bodies such as DFID, JICA, CIDA, AFD, the Word Bank and the United all of whom the Principal Investigator has close relationships with owing to his role as Director of the IGC. Owing to their salience in national and international policy circles we would expect that the findings from these studies would be covered fairly extensively in the media including on the various blogs and other websites that focus on issues connected to poverty reduction.

Workshops have been held with the implementing partners at the inception of each of the proposed projects to discuss design and timelines. Workshops during the course of the proposed research will he held to validate the direction that the research is taking and to involve a wider set of stakeholders in government, NGOs, bilateral and international development organizations and the media in the dissemination of the research findings. Such workshops will be held in each of the three countries - Bangladesh, Uganda and Pakistan where the Principal Investigator already has close ties to the implementing partners and with these stakeholders.

Publications

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Bandiera O (2017) Labor Markets and Poverty in Village Economies* in The Quarterly Journal of Economics

 
Description An intervention showing promise in helping the ultra-poor move onto a sustainable trajectory out of poverty is a comprehensive livelihood programme providing a 'big-push' with complementary investments in productive assets and skills training. First pioneered by the NGO BRAC in Bangladesh, the programme has been replicated in 20 other countries. The project has funded a rigorous seven-year evaluation of the first of these livelihood programmes, BRAC's 'Targeting the Ultra-Poor' programme in rural Bangladesh. Targeted households increase earnings by 37% and improve their consumption, savings, and asset accumulation. Results from Bangladesh are consistent with evidence from randomised evaluations of pilots in six other countries, which suggest BRAC's approach improves outcomes for the ultra-poor across diverse contexts. Longer-term evaluations (four and seven years later) suggest long-run impacts may be even larger than two-year effects.
The research in Pakistan shows that two years after reception, transferred assets have been largely retained and evolved into the focus of household's labour market activities, whereas households receiving cash transfers have used these to invest in similar types of assets. Most importantly, there has been a significant occupational shift out of wage employment and into self-employment for both in-kind and cash transfer recipients. This is an encouraging development in terms of poverty alleviation, confirmed by an observed increase in earnings for the two treatment arms. This is an important finding for governments who implement unconditional cash or asset transfers and for policymakers who support these programmes. The qualitative part of this research project, conducted for a small subset of the total study sample, sheds light on people's experience of poverty, suggesting that poverty is mainly associated with landlessness and lack of access to basic public services such as health, education and potable water.
The Uganda study findings suggest that, although broadening financial inclusion has become a priority in development policies, increasing the reach of credit services is not sufficient to generate impacts on income for those who live farther away from markets. Usefulness of other financial services needs to be explored for these communities while expanding credit services in communities with stronger connections with cash economies. Given the importance of proximity to trading centres for both agriculture extension and credit for making an impact, there needs to be stronger market linkage initiatives for remote villages. The results also suggest that social connections shape the delivery of an agricultural extension program, such that in villages with strong rivalries/ cleavages, it may be optimal to recruit non-local extension workers.
Academic paper with full results from the Bangladesh study:
https://academic.oup.com/qje/article-abstract/132/2/811/3075123Growth brief summarising key results from the Bangladesh study for a policy audience:
https://www.theigc.org/wp-content/uploads/2015/12/IGCJ2287_Growth_Brief_4_WEB.pdf
UNDP "Policy in Focus" series:
http://ipc-undp.org/pub/eng/PIF39_Debating_Graduation.pdf
VoxDev blog:
https://voxdev.org/topic/labour-markets-migration/labour-markets-and-poverty-village-economies
Research preview summarising key results from the Uganda study for a policy audience:
ftp://bracug.org/research/uploads/research-preview-2-20151105.pdf
Media coverage:
http://www.economist.com/news/international/21679812-how-rescue-people-deep-povertyand-why-best-methods-work-leaving-it-behind
http://www.economist.com/news/international/21679811-how-test-everything-sluggish-teenagers-corrupt-bureaucrats-measure-measure
http://www.bbc.co.uk/programmes/b06r8svy
http://www.theguardian.com/global-development-professionals-network/2015/dec/09/how-to-transform-the-lives-of-ultra-poor-women-new-evidence-from-brac-in-bangladesh
http://news.trust.org//item/20151209000307-w8iiq/?source=fiOtherNews2
https://www.theguardian.com/global-development/2016/dec/06/has-bangladesh-charity-found-way-to-banish-extreme-poverty?CMP=share_btn_tw
Blogs:
http://blogs.worldbank.org/impactevaluations/poverty-reduction-through-large-asset-transfers-look-long-run
http://oxfamblogs.org/fp2p/how-assets-training-can-transform-the-lives-of-the-ultra-poor-new-evidence-from-bangladesh/#prettyPhoto
http://www.theigc.org/blog/creating-entrepreneurs-a-big-new-idea-in-development/
Event links:
Graduation Leadership Summit and Global Learning Event: https://www.microfinancegateway.org/sites/default/files/graduation_leadership_summit_and_global_learning_event_summary_notes_.pdf
Tackling Extreme Poverty: Evidence From the Field: http://www.theigc.org/event/igcbrac-ultrapoor-conference/
Rotary International's Annual Economic Development Conference (Event Programme): http://www.rotarycapetown2016.com/programme/programme
SEEP Network Annual Conference: http://www.seepnetwork.org/peer-learning-sessions-pages-20870.php
Exploitation Route The paper on findings from the Bangladesh evaluation was published in the Quarterly Journal of Economics in May 2017. The PI continues to work closely with BRAC to build knowledge amongst both academics and practitioners on the ultra-poor programme and help to crowd in other organisations including Governments, which would greatly expand the potential reach of the programme impacts. The PI continues to work with the BRAC Advocacy Group on the Ultra-poor Program and has been invited to visit Bangladesh to take part in BRAC's ultra-poor summit. Further data collection and analysis for the Pakistan and Uganda evaluations will also allow findings to be published and presented more widely. The team is also in continuing discussions with regards to the scale-up of ultra-poor programmes by the Benazir Income Support Programme in Pakistan, and with the PPAF on a long term research project and the possibility of the IGC taking an ongoing advisory role (as data becomes available) in how PPAF implements graduation.
The key end users of the research findings are anticipated to be NGOs, Governments, bilateral and multilateral development organisations interested in using evaluations of ultra-poor programmes to address extreme poverty in a wide variety of settings. It is hoped that the existing relationship between the evaluation team and the Government in Pakistan, and ongoing discussions between the PI and the Government of Ethiopia, will help to encourage take-up of ultra-poor programmes as part of state livelihood programmes, allowing for a much larger scale of impacts. The PI will also continue to build on the strong co-generation of knowledge with other implementing partners, especially BRAC in Bangladesh and Uganda, which has been a central tenet of the programmes since their inception. These stakeholders are key users of the evaluation findings and their role in programme design and implementation has therefore been crucial. They have also played an important role in helping to disseminate results and build momentum for programme scale-up and replication in other contexts. The evaluation teams will also continue to share experience and best-practice across academic, policy and practitioner communities, and disseminate results more widely via public presentations and media.
Sectors Communities and Social Services/Policy,Other

 
Description In Bangladesh, BRAC's ultra-poor programme had reached over 360,000 households by 2014. An endline survey conducted in 2014 allowed us to evaluate the impact of the programme seven years after initial implementation. Findings have been presented in several non-academic and academic fora and the programme has served as a template for similar programmes that have been implemented in a variety of contexts by different implementing partners. CGAP, who have organised over 10 pilots of ultra-poor pilots around the world and provide technical assistance to several governments, documented at least 30 instances of governments piloting or scaling up variants of the programme. This research has been a key advocacy tool for BRAC because it evaluates the longest longitudinal randomized control trial of a Graduation program: 21,000 households over 7 years. By providing rigorous evidence of lasting results, the research helps inform the over 30 million USD that BRAC allocates to Targeting the Ultra Poor each year. BRAC now uses the study in nearly all aspects of its graduation-related efforts including donor relations, advocacy, and technical assistance. In January 2016, BRAC released the 116 page PROPEL Toolkit: An Implementation Guide to the Ultra-Poor Graduation Approach - an in-field tool guide for graduation approach implementers which heavily cites the research. The Pakistan project was implemented in four districts of southern Punjab and also serves as a rigorous evaluation of the flagship asset transfer programme of the Pakistan Poverty Alleviation Fund (PPAF, a large state fund) that is in operation across the country. Qazi Azmat Isa, CEO of PPAF, met the research team to discuss future research engagement with the IGC, including evaluating the graduation approach in Pakistan. Mr. Isa expressed interest in not just a long term research project, but also in having the IGC take an ongoing advisory role (as data becomes available) in how PPAF implements graduation. The Benazir Income Support Programme (BISP) - one of the largest social protection programmes in the developing world - has also been following the study closely and recently proposed to implement a large-scale graduation programme building on this model to target up to 100,000 beneficiaries. The Asian Development Bank has also approached the evaluation team regarding their plans to finance a large-scale asset transfer programme in Pakistan, and how they could benefit from using a similar experimental design for its evaluation. The Uganda project is again being implemented and designed in collaboration with BRAC and combines agricultural extension with access to microfinance, for which there is a scarcity of evaluations in rural African contexts. A joint IGC-BRAC Ultra-poor conference was held at the London School of Economics in December 2015 and organised by the project PI with excellent participation from academic, policy and practitioner attendees from a range of both developed and developing countries, positive feedback and outcomes, and widespread media coverage. The PI has continued to work with the IGC and BRAC to encourage take up of programmes based on the ultra-poor model among Governments, and continues to advise the BRAC Advocacy Group on the ultra-poor programme on how to raise further funding for the BRAC ultra-poor programme and help to crowd-in and train other organisations. A selected list of advocacy events featuring the research follows: Global Philanthropy Forum (2014), Graduation Leadership Summit and Global Learning Event - hosted by CGAP (2015), Tackling Extreme Poverty: Evidence from the Field Conference (2015), Rotary International's Annual, Economic Development Conference (2016), SEEP Network Annual Conference (2016), Washington DC Speaking Tour (Sep. 2016 - USAID, OPIC, U.S. State Department, RESULTS) and Graduation Training for UN High Commissioner for Refugees (2016). In addition, the research has been incorporated into immersion visits with delegations from the Indonesian Ministry of Social Affairs, Australia's Department of Foreign Affairs and Trade, and the Malawi Social Action Fund. BRAC has also conducted Design Workshops with the Lesotho Ministry of Social Development, the Tanzania Social Action Fund, and the Botswana Ministry of Local Government and Rural Development. Dissemination has also extended policy makers to the general public. Publications have appeared in The Economist, The BBC, The Guardian, and Thomas Reuters Foundation News, as well as Oxfam's, International Growth Center's, and The World Bank's Blogs. Discussions are also ongoing with the Pakistan Poverty Alleviation Fund to incorporate a new graduation program which is backed by evidence from the research.
Impact Types Societal,Economic,Policy & public services

 
Description Joint IGC-BRAC Ultra-poor conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Excellent participation from academic, policy and practitioner attendees from a range of both developed and developing countries, positive feedback and outcomes, and widespread media coverage.
Year(s) Of Engagement Activity 2015
URL http://www.theigc.org/event/igcbrac-ultrapoor-conference/