This paper reviews the recent literature in economics on small-scale entrepreneurship (“microentrepreneurship”) in low-income countries. Major themes in the literature include the determinants and consequences of joining the formal sector; the impacts of access to credit and other financial services; the impacts of business training; barriers to hiring; and the distinction between self-employment by necessity and self-employment as a calling. The paper devotes special attention to unique issues that arise with female entrepreneurship.
In principle, firms in developing countries benefit from the fact that advanced technologies and products have already been developed in industrialized countries and can simply be adopted, a process often referred to as industrial upgrading.
Although global flows of foreign direct investment (FDI) have not recovered since the 2008 financial crisis, flows to developing countries have continued to register a very modest growth. But what is the impact of these FDI inflows on the recipient developing economies?
Special economic zones (SEZs) or industrial parks can be an effective instrument to promote industrialization and structural transformation, but only when implemented properly in the right context. More than 50 years of experience with special export zones yields a mixed picture.
A common concern with efforts to directly help some small businesses to grow is that their growth comes at the expense of their unassisted competitors.
