Nearly one in 5 people in the world lives in poverty. Even in many developed countries such as the U.S., poverty rates exceed 12%. In an age of breathtaking technological progress and dynamic social change, poverty remains stubbornly persistent.
As a professor of entrepreneurship, I’m interested in a critical question: Can people in poverty create their own path to prosperity? In other words, is venture creation a viable poverty-alleviation tool?
My work has shown that it can be—with the right kind of support. However, that support is often lacking.
A big part of the problem is ignorance: Most people simply don’t know much about poverty and entrepreneurship. There are plenty of myths when it comes to the ventures of the poor, due in part to the lack of hard data about the businesses of those in poverty.
These misconceptions have influenced public policy officials, economic development professionals and academics. As a result, they tend to undervalue the important economic and social role that these businesses play.
In an attempt to correct the record, here are six facts that people should know about poverty and entrepreneurship.
Fact 1: Poor people start businesses—lots of them
It’s a myth that entrepreneurship is just for the rich. In fact, many ventures across the globe are started by people in disadvantaged circumstances—actually most of them. While hard data is difficult to come by, the evidence we do have is suggestive. For example, in some high-poverty sub-Saharan African countries, as many as two out of three adults operate or are in the process of starting their own business.
