Abstract
Around the globe, small-scale entrepreneurship provides an important vehicle for income generation for women and men. Some people start microenterprises because they need more flexibility in their terms of employment, they have innovative ideas that warrant starting a new business, or they seek upward mobility in the labor market. Other people, often those at the lower end of the income scale, have little choice but to engage in self-employment when paid employment opportunities are scarce. A substantial proportion of the poor around the world rely on self-employment as a source of income as they navigate a host of constraints that include a lack of affordable loans from formal sources, restricted access to reliable savings accounts, few formal sources of insurance, insecure land rights, and insufficient public infrastructure such as piped water and electricity. More broadly, diversification of economic activities, especially in the rural sector, and the growth of nonfarm self-employment endeavors, serves not only as a means of survival for the very poor, but can also contribute to poverty reduction.