Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

by Abhijit V. Banerjee

Starting a small business was the only option they had. Her first venture was to cook snacks and sell them in the city, but she wanted something she could do from home, so she could mind the children. So they started a shop with a loan Pak Awan got from a cooperative he belonged to, even though there were already two other shops within 50 yards. Pak Awan and his wife did not enjoy running the business. They were eligible for a second loan from the cooperative, which would have allowed them to expand their shop, but had decided that they didn’t want it. Unfortunately for them, a fourth shop opened in the neighborhood and threatened their livelihood by offering a more diverse array of goods, and when we met them, they were in the process of taking out a new loan to buy more stock. Their hope for their children was that they would each grow up to get a salaried job, preferably in a government office.