Do Interventions Targeted at Micro-Entrepreneurs and Small and Medium-Sized Firms Create Jobs? A Systematic Review of the Evidence for Low and Middle Income Countries

Abstract

Worldwide 600 million jobs are needed over the next 15 years to keep employment rates at their current level. Governments, non-governmental organizations and donors spend on targeted programs and broader policies to enhance employment creation and the creation of new firms. Because most employment in low and middle income countries is in micro, small and medium-sized enterprises, these firms are especially targeted by such interventions. Despite these efforts, not much is known about which of these interventions are really effective and under which conditions particular interventions work. This systematic review synthesizes the existing evidence on the impact of these programs. Overall the review shows that creating employment is a very complex challenge. Many conditions have to be met before interventions in favor of individual enterprises do not only improve business practices and performance but also lead to additional jobs. A striking finding is that the study design matters for the impacts found; randomized controlled trials find systematically smaller effects than quasi-experimental studies. A significant shortcoming of the literature is that almost nothing is known about long term effects and cost effectiveness.

Impact of financial inclusion in low‐ and middle‐income countries: A systematic review of reviews

“…Some of the systematic reviews (or meta-studies) are fairly broad, aiming to cover the whole microfinance spectrum (e.g., Duvendack et al, 2011). Others cover specific interventions, such as microcredit (e.g., Vaessen et al, 2014), formal banking services (Pande, Cole, Sivasankaran, Bastian, & Wendel, 2012), microenterprise (e.g., Grimm & Paffhausen, 2015), microsavings and microleasing (Stewart et al, 2012) and microinsurance (Cole, Bastian, Vyas, Wendel, & Stein, 2012). Some systematic reviews focus on particular populations, such as Sub-Saharan African recipients (e.g., Stewart, van Rooyen, Dickson, Majoro, & de Wet, 2010), particular methods of providing financial services, such as SHGs (e.g., Brody et al, 2015) or particular outcomes, such as health (e.g., Leatherman, Metcalfe, Geissler, & Dunford, 2012) or empowerment (Brody et al, 2015;Vaessen et al, 2014).…”

Interventions to improve the labour market outcomes of youth: A systematic review of training, entrepreneurship promotion, employment services and subsidized employment interventions

“…The effort to undertake this systematic review was initially motivated (see Section 1.4) by the statement that new evidence was needed to support decision-making on youth employment. Specifically, similar systematic reviews and studies either required urgent updating (Betcherman et al, 2007) or simply posed related, yet distinct, research questions (e.g., Card et al, 2010Card et al, , 2015Tripney et al, 2013;Grimm & Paffhausen, 2015;Filges et al, 2015).…”

Female Entrepreneurship and Informality in Low- and Middle-Income Countries: What Have We Learned So Far?

“…While generalised statements regarding enterprise development support are always complicated, as contextual factors strongly contribute to results and implementation weakness could negatively affect otherwise promising outcomes (McKenzie, Puerto and Odhiambo 2019), the evidence from the literature on enterprise development support backs the MUVA approach. In general, the more specific and targeted the training, the more likely it is to improve business outcomes (Grimm and Paffhausen 2015). This is also the conclusion of Aga et al (2021) in the context of Mozambique, where business training and skills are the best interventions for informal enterprises that have a high resemblance with formal business and low performance, and informal enterprises that have a low resemblance and high performance.…”