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In the wake of global economic downturn, policymakers in many developing countries are turning their gaze upon two things: private sector-led strategies for economic growth and women’s potential to contribute to this growth. As a consequence, female entrepreneurship has been an area of particular interest to policymakers, businesses, and non-governmental organizations, and many female-targeted policies and programs have been implemented, ranging from microfinance and subsidized loans to training and incubator programs. However, the focus on entrepreneurship as a development strategy conceptualizes entrepreneurship in a particular way—as opportunity entrepreneurship. Opportunity entrepreneurs can identify available opportunities and exploit them; they are often highly educated, have prior managerial experience, and have solid job alternatives with good salaries. They also have access to external capital and formal business networks, and operate in the formal sector of the economy. Opportunity entrepreneurs are more likely to have high-growth and high-tech businesses, but a large portion of entrepreneurship in the developing world— street vending, for example—does not fit into this category. Necessity entrepreneurs are driven to entrepreneurship for lack of other job options; they generally operate in the informal sector and lack legal protection, and their businesses do not facilitate upward mobility. The proliferation of necessity entrepreneurship in the developing world is associated with global trends of increasing informal and flexible employment over the last few decades, and it exacerbates gender inequality. Women are more likely than men to be engaged in vulnerable, informal employment across the globe, and even within the informal sector, the highest-paid jobs are primarily held by men, while the lowest-paid jobs are primarily held by women. In nearly all countries, women are more likely to be necessity entrepreneurs than men. However, most existing entrepreneurial programs target the formal sector and neglect the informal sector, disproportionately harming women. Many government-sponsored or private sector-led programs supporting female entrepreneurship focus on highly educated, middle- or upper-income women with prior entrepreneurial experience—a small minority of women. It can be challenging to design programs that effectively meet the needs of informal workers; although international organizations and non-governmental organizations are more likely to reach out to informal sector and rural women, these programs often focus on sustenance rather than business growth. There is no one-size-fits-all approach to designing female entrepreneurship programs for the informal sector. However, improving and tailoring such programs can establish a ladder between necessity and opportunity entrepreneurship, reduce gender inequalities, improve informal sector living conditions, and increase economic dynamism and informal-formal sector linkages in developing countries around the world.

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Faculty Publications