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

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.

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.