Nabila Tabassum Chowdhury > Recent Status Updates

"Because most good jobs are in the city, moving can be the first step to changing a family’s trajectory."

"So, if a member of a family has a steady job, schools will accept their children more readily; hospitals will give more expensive treatments, knowing they will be paid; and other members of the family may be able to make the investments in their own businesses that are necessary to allow them to grow."

"A steady and predictable income makes it possible to commit to future expenditure and also makes it much easier and cheaper to borrow now."

"A stable job can, by itself, change people’s outlook on life in decisive ways. "

"The factory was typically located in a village that had low wages to start with, and in those villages, the growth of factory employment did much more for wage growth than agricultural productivity growth resulting from the famed Green Revolution."

"Rural factory employment increased tenfold from the early 1980s to 1999. In 1999, about half of the villages Foster and Rosenzweig studied, which were initially all rural, were located near a factory, and in those villages, 10 percent of the male labor was employed at a factory."

"The availability of secure jobs can have a transformational effect."

"The emphasis on government jobs, in particular, suggests a desire for stability, as these jobs tend to be very secure even when they are not very exciting. And in fact, stability of employment appears to be the one thing that distinguishes the middle classes from the poor."

"The poor don’t see becoming an entrepreneur as something to aspire to."

"We have started including the question “What are your ambitions for your children?” in surveys given to poor people around the world. The results are striking. Everywhere we have asked, the most common dream of the poor is that their children become government workers."

"Perhaps the many businesses of the poor are less a testimony to their entrepreneurial spirit than a symptom of the dramatic failure of the economies in which they live to provide them with something better."

"It is entirely possible, therefore, that many business owners, and especially female business owners, do not particularly enjoy running a business, and indeed, dread the thought of expanding it."

"Many of the businesses are run because someone in the family has (or is believed to have) some time on hand and every little bit helps. This person is often a woman, and she typically does it in addition to her housework; indeed it is not clear that she always has much of a choice when the opportunity to start a business comes up."

"We are, of course, not saying that there are no genuine entrepreneurs among the poor—we have met many such people. But there are also many of them who run a business that is doomed to remain small and unprofitable."

"Taken together, this evidence makes us seriously doubt the idea that the average small business owner is a natural “entrepreneur,” in the way we generally understand the term, meaning someone whose business has the potential to grow and who is able to take risks, work hard, and keep trying to make it happen even in the face of multiple hardships."

"Here again, the regular training was ineffective, but giving the entrepreneurs the simplified tips did lead to an increase in profit. This is probably because people were willing to adopt these rules of thumb, and they actually simplified their lives rather than demanding even more intellectual resources from them."

"In the Dominican Republic, another training program tried, alongside the regular training module, a simplified curriculum, suggesting the entrepreneurs focus on simple “rules of thumb” (such as keeping the business and household expenses separate, and paying oneself a fixed salary)."

"At weekly meetings, clients are told about how to keep better accounts, manage their inventories, understand interest rates, and so forth. Programs of this kind were evaluated in studies in Peru and India.7 The research results in both countries found some improvement in business knowledge but no changes in profits, sales, or assets."

"In the same way that the poor may save less than the middle class because they know that their savings will not be enough to reach a consumption goal they are really looking forward to, they may not invest as much (not only money but also emotions and intellectual energy) in their businesses because they already know that they can’t make a real difference."

"Our diagnosis is correct, the reason that the poor do not grow their businesses is that, for most of them, it is too hard: They cannot borrow to cross the hump, and saving up to get there will take too long unless their businesses have extremely high overall returns."

" Although small loans may be available, no one (not even the MFIs, which, as we have seen, like playing it safe) will lend these small entrepreneurs enough money. Moreover, getting there might also need some management and other skills that they don’t have and cannot afford to buy. Therefore, they are stuck staying small."

"Invest little, make little money, and remain too poor to invest much more, or invest enough to cross the hump and then become rich and invest even more and get even richer. The point is that for most people, crossing that hump is not an option."

"This represents Xu Aihua’s history: She started with OP with her secondhand sewing machines and at some point managed to switch to QR and the automatic machines."

"But this is not the whole answer. First, as we saw, although there are millions of microcredit borrowers, there are many more who have the opportunity to borrow but choose not to."

"The fact that marginal returns are high means that it is easy to grow the overall returns—just put more money into the business. So why aren’t all the small businesses growing really fast? One part of that answer we already know—most of these businesses cannot borrow very much, and what they can borrow is very expensive."

"This is the paradox of the poor and their businesses: They are energetic and resourceful and manage to make a lot out of very little. But most of this energy is spent on businesses that are too small and utterly undifferentiated from the many others around them. As a result, their operators have no chance to earn a reasonable living."

"increasing the amount invested increases returns the most when the initial investment is small, and this increase eventually tapers off. In other words, the marginal return is high when investment is small."

"The paradox is explained by the fact that marginal returns can be high even though overall returns are low."

"The low profitability of businesses run by the poor also explains why, as we saw in Chapter 7 (in our RCT of the Spandana program, for example), microcredit does not seem to lead to a radical transformation in the clients’ lives. If the businesses run by the poor are generally unprofitable, this may well explain why giving them a loan to start a new business does not lead to a drastic improvement in their welfare."

" But almost one-half of those that had one in 2002 had none by 2005. Similarly, in Indonesia, only two-thirds of the businesses of the poor survived five years. And out of those that did, the fraction that had one employee or more did not increase over the five-year period."