Various communities ofpractice have been established recently to advance the general idea of thinkingand working politically in development agencies. One of the obstacles they faceis a lack of well documented examples of the gains from working in morepolitically informed ways with aid. Another is an apparent shortage ofoperational models that provide a coherent, evidence-based alternative tostandard donor practices. This paper addresses this particular gap bydescribing the practice of what has been called development entrepreneurshipand explaining some of the ideas from outside the field of development thathave inspired it.

Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs through several classroom coaching and programs, and training. The main point of the development process is to strengthen and increase the number of entrepreneurs.


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In simple words, the entrepreneurship development process is about supporting entrepreneurs to advance their skills with the help of training and coaching classes. It encourages them to make better judgments and take a sensible decision for all business activities.

This paper poses and answers a number of critical questions about the relationship between migration and entrepreneurship in the process of economic development. In doing so, we show that the standard policy response to migrants and migrant entrepreneurs are often based on an inadequate understanding of migrant entrepreneurs. The questions we pose are the following: (i) Are immigrants really more entrepreneurial than natives? (ii) Are migrant remittances likely to fund entrepreneurship in their home countries? (iii) Are return migrants more likely to be entrepreneurial than non-migrants? And finally, based on the answers, (iv) Does migration matter for development? We conclude that one must avoid seeing migrants as super-entrepreneurs and that the (positive) developmental impact of migration is more significant through other channels. Removal of discriminatory barriers against migrants and against migrant entrepreneurs in labour, consumer and financial markets will promote development in both sending and receiving countries, not least through reducing the shares of migrants that are reluctant entrepreneurs.

Entrepreneurship and migration are at the very top of many national and international agendas. It is easy to see why, globally, there are probably a billion entrepreneurs (measured in terms of self-employment)Footnote 1 and more than 232 million cross-border migrants (United Nations 2013). The development impacts of both migrants and entrepreneurs are therefore likely to be substantial. For instance, migrant remittances are estimated to be around US dollar 550 billion annually (more than two times the volume of aid) (World Bank 2013), and they contribute significantly to poverty reduction in some countries (Adams and Page 2005). In the same vein, entrepreneurs invest billions and create substantial numbers of jobs. Both migration and entrepreneurship have therefore attracted attention from policymakers, donors, NGOs and others interested in their possible impacts on poverty reduction and development.

The problem is that entrepreneurship and migration policies often do more harm to the poor and to development, than good. Naud (2010, 2011) has dealt with the relationship between entrepreneurship and development and growth, and the difficulties that well-meaning but poorly informed policies may cause. Not all entrepreneurs create sustainable or substantial jobs, most do not innovate much and substantial numbers of firms fail after only a few years. In such a context of heterogeneity, policies are often ineffective and often may have undesired outcomes. For example, easing entry restrictions for potential entrepreneurs may result in a large pool of entrepreneurs with insufficient entrepreneurial ability and skills, which in combination with asymmetric information about their skills and ability can result in a general contraction of finance from banks (who do not want to lend to entrepreneurs with poor ability) (de Meza and Webb 1987). Much scarce resources are being spent on providing training and education to prospective entrepreneurs with little, and even opposite than intended, outcomes. Often, participants of such programmes only realize what it means to be an entrepreneur during the course, and as such, their aspirations change because of this additional knowledge, even discouraging some who had initially planned to start their own business (Oosterbeek et al. 2010).

Within debates on migration and development, migrants are often expected to be super-entrepreneurs who will benefit development in home and destination countries through their greater prowess as entrepreneurs, their remittances, their trans-national entrepreneurial activity and their business acumen. Proponents of this view have pointed to the successes of migrant entrepreneurs in China and the USA to argue that migrants may not need formal wage jobs. For instance, it has been pointed out that in successful developing countries, such as China, 25 % of migrants are self-employed (Giulietti et al. 2012). Saxenian (2002, 2006) and others have praised the role of immigrants in the development of Silicon Valley, where close to one third of the technology businesses were operated by immigrant owners by the end of the 1990s.

Despite these a priori reasons for seeing migrant entrepreneurs as super-entrepreneurs, and in fact being more entrepreneurial than natives, the empirical evidence is not strong. For instance, a recent OECD (2010) review finds that migrant entrepreneurship, measured by self-employment rates, is more common than non-migrant entrepreneurship in only 13 out of 25 countries in the OECD. In other words, in about half of these OECD countries, migrants are less likely than natives to be self-employed. Moreover, in the countries with larger immigrant populations, such as Germany, Italy, Spain, Switzerland and The Netherlands, migrants are much less likely than natives to be self-employed (OECD 2010). In the case of migrants in Germany, Brixy et al. (2013) even find that migrants believe less often that they have the necessary skills to run a business and that they were not more risk averse than non-migrants. And in the case of The Netherlands, Jansen et al. (2003) find the rate of entrepreneurship amongst the native Dutch population as well as of the Turkish immigrant population to be almost twice as high as amongst immigrant populations from Morocco, Suriname and the Antilles.

The literature on the impact of remittances on development contains controversial findings. On the one hand, there exists a somewhat pessimistic view of the role of remittances, recognizing negative effects such as moral hazard (Chami et al. 2005) as well as exchange rate appreciation and reduced export competitiveness (Amuedo-Dorantes and Pozo 2004; Bourdet and Falck 2006). On the other hand, a more optimistic view emphasizes that remittances can contribute to poverty reduction, consumption smoothing and household expenditures (Acosta et al. 2007; Adams 2006). Remittances can also raise household spending on education (Acosta et al. 2007; Cox Edwards and Ureta 2003) and health services (Hildebrandt and McKenzie 2005; Mansuri 2007). In addition, part of remittances that are received by households may be used for savings or investments (de Haas 2005). Giuliano and Ruiz-Arranz (2009) show that in some countries with underdeveloped financial systems, remittances are used to overcome credit and liquidity constraints and are invested into small business development. They find that when the development of the financial sectors is lower, the contribution of remittances to economic growth is stronger (Giuliano and Ruiz-Arranz 2009).

Yang (2008) estimates the responses of Filipino households to economic shocks in the destination country of migrated household members. He shows that a positive shock leads to increased levels of investment in entrepreneurship in the origin households. Vaaler (2011) finds evidence that remittances support venture capital funds and firm start-ups in home countries, especially when they come from migrants living in migrant communities abroad. The effects decrease when the remittances are sent by highly educated migrants (Vaaler 2011).

Overall, however, most of the literature on development and migration seems to concur that remittances are largely used to fund consumption (de Haas 2010), which is not necessarily a bad thing for households in the poorest countries (Yang 2011). Whether remittances are used for business investments and self-employment activities is highly dependent on the context as is shown by the mixed evidence on the relationship between the two. It seems that it matters where the remittances come from, where they go and who is then responsible for the way they are used in the receiving household. As such, more research is necessary in order to really understand the interactions between remittances and entrepreneurship and to establish under what conditions migrant remittances are likely to fund entrepreneurship in their home countries.

While there is a growing literature on the development impacts of the rising flows of remittances to poorer countries, it is only fairy recently that attention has been paid to the potential of return migrants to start up enterprises in their home countries. This reflects the greater awareness of the fact that most migration is not permanent, but temporary (Mesnard 2004). Hence, migrants may learn while away from their home country or region, as well as gather savings and build foreign networks, all of which may alleviate constraints on starting a new enterprise upon return (Marchetta 2012; Rapoport 2002). However, while abroad, migrants may lose contact with their networks at home and hence experience a depreciation of their social capital, which may make it more difficult to establish a new enterprise upon return. Accordingly, to the extent that credit constraints and a lack of skills and experience are obstacles to entrepreneurship in developing countries, and social capital is not as crucial, one may expect return migrants to be more likely to be able to start up new firms than non-migrants (Wahba and Zenou 2012). 17dc91bb1f

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