CONTENTS

Economic Perspectives

FOCUS

THE ROLE OF MICROENTERPRISE IN U.S. DEVELOPMENT POLICY
By Emmy Simmons, Assistant Administrator, Bureau for Economic Growth, Agriculture and Trade, U.S. Agency for International Development

Microenterprises are the predominant source of income and employment for hundreds of millions of people worldwide. The U.S. government sees support for these microenterprises as a key component of its poverty reduction strategy and foresees that this assistance will increasingly focus on communities whose economies have been ravaged by civil wars and HIV/AIDS.

PAVING THE WAY FOR ENTREPRENEURS TO ENTER THE MARKET ECONOMY
By Gaddi Vasquez, Director, Peace Corps

The Peace Corps is funneling help to community-based small businesses and microenterprises, particularly those that focus on youth and women. Working side by side with low-income entrepreneurs, Peace Corps volunteers are helping them, and by extension their countries, develop new links to domestic and international markets.

MICROCREDIT LOANS ARE CRITICAL TOOLS TO HELPING THE WORLD'S POOR
By Congressman Christopher H. Smith

Microenterprise programs are effective because they help the poor help themselves — a bottom-up approach distinct from the top-down strategies of most foreign aid bureaucracies. A member of Congress explains how legislation he authored, which was signed into law by President George W. Bush, will increase microenterprise spending for the poorest of the poor.

FINANCING DEVELOPMENT: BANKING ON MICROENTERPRISE
By Katharine McKee, Director, Office of Microenterprise Development, U.S. Agency for International Development

Only 5 percent of low-income households around the world have access to financial services. Yet these services are now considered critical to small business development and income and employment growth in all countries. McKee outlines U.S.-supported initiatives to increase financial services to poor entrepreneurs, including the use of substitutes for traditional collateral, flexible repayment schedules, and access to expanded services such as insurance and flexible savings accounts.

BEST PRACTICES IN MICROENTERPRISE DEVELOPMENT: A USAID PERSPECTIVE
Office of Microenterprise Development, U.S. Agency for International Development

Successful microenterprise development requires products tailored to the diverse financial needs of individuals and entrepreneurs, cost structures that allow providers of microenterprise services to make profits, and regulatory and tax policies that encourage enterprise development.

COMMENTARY

BUILDING AN ENABLING ENVIRONMENT: A LONG-TERM PERSPECTIVE OF MICROENTERPRISE
By Charles Cadwell, Kathleen Druschel, and Thierry van Bastelaer, The Center for Institutional Reform and the Informal Sector, University of Maryland

Small businesses and microenterprises thrive best where good governance is firmly in place. The authors suggest that foreign assistance be refocused toward building the legal and regulatory framework that promotes business development.

WOMEN AND MICROFINANCE: OPENING MARKETS AND MINDS
By Susy Cheston, Senior Vice President for Policy and Research, Opportunity International

The microfinance industry has long recognized women as a force in international development and as a market worthy of attention, but it could do even better if it addressed ongoing barriers to women's participation and empowerment.

TWO VIEWS OF MICROENTERPRISE LENDING

MICROFINANCE AND THE GLOBAL DEVELOPMENT CHALLENGE
By Alex Counts, President, Grameen Foundation USA

It has been clearly shown that microfinance can have a major impact on reducing poverty at both the local and national levels. Women business owners often are associated with the best credit risks and are more likely than men to funnel earnings into their children's education. The author suggests that formal business training is not always a prerequisite to successful business development.

CREATING AND BUILDING A SUCCESSFUL MICROFINANCE ORGANIZATION
By Gregory F. Casagrande, Founder and President, South Pacific Business Development Foundation

Small loans, often not more than a few hundred dollars, have helped to improve income and employment growth for many Samoans and others in the independent Pacific island nations. The author outlines some of SPBD's loan strategies that have resulted in a nearly 100 percent repayment rate by its borrowers.

PROFILES OF MICROENTREPRENEURS

Four successful microentrenpreneures from Benin, Haiti, Russia, and the Philippines.

FACTS AND FIGURES

QUICK FACTS

USAID FUNDING FOR MICROENTERPRISE

RESOURCES

ADDITIONAL READINGS

KEY INTERNET SITES

Economic Perspectives

An Electronic Journal of the U.S. Department of State

Volume 9 Number 1 February 2004

The Bureau of International Information Programs of the U.S. Department of State provides products and services that explain U.S. policies, society, and values to foreign audiences. The Bureau publishes five electronic journals that examine major issues facing the United States and the international community. The journals — Economic Perspectives, Global Issues, Issues of Democracy, U.S. Foreign Policy Agenda, and U.S. Society and Values — provide statements of U.S. policy together with analysis, commentary, and background information in their thematic areas.

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