Entrepreneurship programs in developing countries: a meta regression analysis

The World Bank study of 37 impact evaluation studies of entrepreneurship programs in developing countries (including the Philippines) makes the following findings

Overall
1. Particularly for labor market activities and business performance, youth is highly associated with program success.
2. Women are not associated with any large and significant impacts other than the outcome of attitudes, indicating that entrepreneurship programs seem useful for female empowerment but may not be sufficient to address various barriers faced by women.
3. Existing entrepreneurs also seem to benefit from the programs in improving their business knowledge and practice, but this is negatively associated with business performance.
4. When it comes to intervention type, a package providing both training and financing seems to perform better in promoting labor market activities. However, training alone can be quite useful to improve business knowledge and practice, and financing alone does well in enhancing business performance by releasing credit constraints. This suggests that more customized interventions can enhance cost effectiveness depending on the outcomes of interest and the constraints.

Outcome level
Labor Market Outcomes
1. A package approach is found to be more effective to improve labor market activities on average, but the extent varies by the type of beneficiary. This finding is strongest for youth and social assistance beneficiaries but does not hold among women. For women, the impacts from microcredit interventions, such as the expansion of access to loans for rural households seem higher than training programs. Women are generally more severely credit constrained, and this in turn can hamper their potential gains from skills training. Financing support performs better for women throughout all outcomes. For business owners, gaining access to finance does little to increase their activities than receiving business training.

2. Training seems to have greater impacts, especially for the higher education group in increasing their income, although this was less evident in the case for labor market activities. A package approach to provide both training and financing seems to be a promising graduation strategy for social assistance beneficiaries as it increases both labor market activities and income.

3. Expansion of access to credit in Bosnia and Herzegovina and the Philippines presents modest performance, while experiences in India and Mongolia do not appear to be as strong. Programs targeting social assistance beneficiaries from Argentina’s Jefes and Chile’s Solidario contribute more to unsuccessful outcomes than successful ones, suggesting that helping the poor exit from social assistance programs by promoting self-employment is a challenging task.

Business and Behavioral Outcomes
1. Business training alone can be quite effective in improving business knowledge and practice. This is particularly true for those who already have their own businesses. For women, however, training does little but financing matters in changing their business practice, suggesting that women may not be the decision maker in business practice unless they have capital under their control.

2. With respect to business performance, financing seems to be the most relevant and effective intervention. Thus access to credit probably plays a greater role in improving business performance than training. That being said, training alone is strongly associated with business performance of youth and higher education individuals, especially in the studies where business training was provided for these entrepreneurs (Bruhn and Zia, 2011 for business training targeted to young entrepreneurs in Bosnia and Herzegovina; Drexler et al., 2011 for business training for microenterprise owners in Dominican Republic), suggesting that a more efficient use of resources can achieve outcomes as effectively when targeted to these groups of entrepreneurs.

3. Many training programs result in improved business knowledge and practice but are unsuccessful when it comes to business performance.

Conclusions
1. With respect to training programs, it seems that vocational and business training work better than financial training, and can be further improved by combining financing support or counseling. Business training for entrepreneurs, in particular, appears to be a relatively cost-effective way of promoting business performance and growth with a short intervention period, although improved knowledge and practice through training does not always materialize as increased income.

2. In terms of financing, there are little variations in effectiveness of cash, in-kind grants, and microcredit.

3. Programs need to be customized for each outcome of interest addressing the specific constraints relevant for the outcome. A package promoting skills with financing support seems to have larger impacts on labor market activity. However, training alone can be quite useful to improve business knowledge and practice, and financing alone does well in enhancing business performance by releasing credit constraints.

4. For women, the largest effects come from providing access to credit, suggesting that access to credit may have been the largest constraint to women in their earning opportunities.

5. Involving the private sector for the delivery of programs and evaluating the program in the longer term appear to be more closely associated with improved effects of programs.

Policy Implications
1. Programs promoting self-employment opportunities and small-scale entrepreneurship can lead to increases in labor market outcomes with important welfare gains.

2. Providing relevant combinations of skills, capital, and counseling support based on the target group’s main constraints is important to achieve better results.

3. The impacts on both labor market and business outcomes are significantly higher for youth. This is especially relevant in many parts of the developing world that are facing the ‘youth bulge’ and aspiring to provide meaningful opportunities to their young populations.

The complete study available at The World Bank site here.

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