In developmental economics, the biggest problem is how can we get people out of poverty. Many experts are working diligently to figure out what is the best way to reduce worldwide poverty. We have made progress; 1.1 billion people have moved out of extreme poverty since 1990. However, 10.7% of the world population still lives living in extreme poverty (World Bank). In order to achieve a reduction in poverty economic growth in developing nations. The key to economic growth is women empowerment in the labor market. In developing nations, the inequality of men and women is greater than in developed nations.
The policy I propose is the creation of Women’s Entrepreneurship Centers (WECs). WECs would be placed in developing nations in areas with high poverty rates. We would conduct a randomized control trial in order to learn the effects of the program. WECs are designed to address 3 specific developmental problems. They are: women empowerment, gender inequality and economic growth in developing nations. I will be discussing the developmental problems and how the policy will help solve them in its design, implementation and evaluation.
The first problem is gender inequality in the labor market. Labor force participation in developing countries show that women participation in consistently lower than men participation. Women are more likely to perform unpaid work like maintaining household and child care (OECD, 2012). This is caused by cultural norms and the opportunity costs of working. However, if a woman’s opportunity cost of not working were higher they would be more likely to work.
The second problem is trying to address is improving women empowerment. Researchers have found that household economic decisions are not a unitary model (). If women are providing a household income they are more likely to have a say in household decisions. Studies have found that when women have control of money they invest in their children (World Bank). Increasing control through increasing their share of income will improve wellbeing of children.
The third developmental problem is increasing economic growth in developing countries. By teaching new job skills, it could increase a woman’s income. If a woman is not currently working it will add an additional income to the household. If a woman is working it could increase their current income. Increasing incomes will increase consumption leading to a spill over affect throughout the community. Entrepreneurship by women is much lower then men in developing nations (OECD, 2012). In the Solow model of growth, long run economic growth will only come from technological change or innovation (Manian, 2017). Entrepreneurship and innovation go hand in hand. Increase in women entrepreneurship will lead to job creation, innovation and economic growth (Valliere and Peterson, 2009).There has already been research in developmental economics that a similar policy would be effective to achieve these outcomes.
In the following, I will discuss the economic research already conducted on similar programs. One study examined the Women’s Income Generating Support (WINGS) program by the Association of Volunteers in International Services (AVIS). Where AVIS targeted poor individuals in villages in war-affected Uganda. The program included $150 cash transfer, 5 days of business training and supervision. It was a random control trial in which the randomized by village level and when the program commenced. The program either started immediately, year-and-a-half later and the control. The control group eventually also received the program after evaluation had ended. The results were that enterprises doubled and saw a significant rise in income (Blattman, Green, Jamison, Lehmann, & Annan, 2016).The strengths of this paper is that it was a random control trial. It also gave through follow-up supervision and randomized different level of supervision to see the affect. The study found that a combination of cash transfers, training and supervision had statistically significant increase in outcomes (Blattman et al., 2016). It supports my policy proposal because WINGS is very similar program elements to my proposal of WECs.
In another study, The Empowerment and Livelihood for Adolescents (ELA) program researchers found that vocational training lead to economic and wellbeing improvements (Bandiera et al., 2017). BRAC Uganda started 1200 “adolescent development clubs’’ the enrollment was open to any adolescent women in the community. The clubs provided ‘hard’ skill training in the way of job skills and business training. In addition, ‘soft’ skills that provided information about sex, marriage and reproductive rights. It was a random controlled trial that was randomized on the community level. It consisted of 3 surveys: pre, during and post. The results saw that treatment individuals were 48% more likely to participate in income generating activities, mostly self-employment (Bandiera et al., 2017). One strength of the study was it examined the ‘interlink ages’ between economic outcomes and wellbeing outcome like marriage and teen pregnancy (Bandiera et al., 2017). Another strength was that this program was originally conducted in Bangladesh and they replicated similar results in Uganda. It supports my policy proposal because evidence supports my chosen target group. It supports because training significantly increased economic outcomes.
Women’s Entrepreneurship Centers would provide women with the skills and opportunity to become entrepreneurs. The goal would to be for every participant to start their own small business. WECs would focus on mentoring, finance and training. The unique element to my proposed policy is using existing infrastructure and employ locals at the WECs. It is the hope that the increase in income will lead to improved well-being, empowerment and economic outcomes.
WECs would encourage women to participate in income generating activity through self-employment. WECs would have business training program. The business training program would include basic math, cash handling and accounting. The programs would be lead by community leaders employed inside the WECs. The business program would be taught in a group setting. It would take place once a week for several weeks. This way women could participate and still attend to their other responsibilities. After completion of the program women will have skills to start their own business. Many women do not start their own business due to lack of credit.
Women might want to start their own business but not have the money and unable to get credit. That’s why another part of the program is after completion of the business training program they are given a cash transfer. While they are unconditional cash transfers, the program does have investment and finance management aspect. It would be encouraged to start their own business. The cash transfers will hopefully lead to increased investment and consumption in the locally economy. Due to the multiplier effect we can see that cash transfers will have a spillover affect and lead to economic growth. Since entrepreneurship also leads to innovation, job creation and economic activity it will help with growth throughout the community.
The last part of WECs is mentorship. The mentorship would be from women community leaders with their own businesses. The point of mentorship is for women to have additional help after receiving the cash transfer. With a conditional cash transfer and mentorship we to have continued development of women entrepreneurs. This will also serve the purpose of survey data with check-in dates same across the experiment. Women enterprises are less likely to have management experience in comparison to men (OECD, 2012). Mentorship program is designed to improve the outcomes of women enterprises’.
In order to establish WECs in a developing nation the following implementation would have to take place. The policy would be best implemented by a non-governmental organization. NGOs would be more effective because they could fundraise to create more WECs. In addition, they could use volunteers to train local staff and conduct surveys used for evaluation. The target group for the program are women late adolescents/early adulthood (note that the age range changes based on cultural norms). WECs would be open to any women that meet the age requirements and live within the target community. WECs would be housed in existing infrastructure like schools/community centers less would lower fixed costs. Staffing would be by women community leaders hopefully this would encourage a higher uptake. Staff would receive additional training and stipend.
It would be a random controlled trial in which randomization happens on the community level. Treatment and control groups would all eventually receive that WECs after all the surveys/follow-up have happened. The treatment communities would get WECs immediately while control would be waitlisted for 3 years. Surveys would be conducted pre, midway and post.
The pre survey would be before someone starts the business program. The midway survey would be 3 months after the cash transfer. The last survey would be after 3 years’ cash transfer. In the control communities we would survey the same random sample of people 3 times in the same increments of time as treatment group. WECs would also keep track of how often individuals came in for mentorship. The survey would include 3 sections: overall wellbeing, economic outcomes and empowerment. In the wellbeing sections questions would pertain to characteristics of household, food consumption, health and etc. Economic outcomes questions would pertain to wage, amount of hours worked, industry/sector of economy and consumption. Empowerment questions would relate to family structure, responsibilities, family decision making, etc. The limitations of this evaluation method is that it is self reported data. In addition, the way a survey is conducted can affect the answers to the survey. The evaluation method is labor intensive and costly.
1. Conclusion