L’interview de Virginie Vial dans China Business Review

Vient de paraître : l’interview de Virginie Vial dans China Business Review sur les micro-entreprises et le bien être économique.

vial-kedge-cbn-oct-2016-2Households’ Micro-Entrepreneurship and Economic Welfare

Micro-entrepreneurship is composed of companies with one to five employees. It represents between 70% and 80% of global employment. It is therefore central in the discussions on employment, growth, and economic development policies. However, in the absence of formal employment opportunities, micro-entrepreneurship is often considered as necessity entrepreneurship, which is generally not productive. Indeed, on the one hand, opportunity entrepreneurship, which is based on innovation, brings growth and productivity gains. On the other hand, necessity entrepreneurship uses low technology and skills, and serves mainly as livelihood provider, thus supposedly not contributing to growth and development. In general, the productivity measurement of these micro-companies is done at the individual level, and ignores their context and heterogeneity.

In particular, in terms of context, it is necessary to estimate the returns of micro-entrepreneurship, not at the level of individuals, but at the level of the household, which carries ownership, management and decisions, saving and financing, production and consumption.

In addition, micro-entrepreneurial households are heterogeneous in terms of their initial level of economic well-being, and have various objectives: supplement their income and consumption; mitigate their vulnerability; escape poverty; increase social status; or acquire non-pecuniary benefits.

This welfare can be measured by three indicators covering different areas: income, which includes short-term market factors; consumption, which includes short-term market and non-market factors; and assets, covering long-term market and non-market factors. Income, consumption and assets reflect different dimensions of economic well-being: obtaining resources; a response to basic needs; and a way to manage risk.

In the case of Indonesia, for example, participation in micro-entrepreneurship has a positive effect on the economic well-being of all households, with a higher relative income for the poorest. For this segment of the population, micro-entrepreneurship has a strong impact on the additional income, which translates into a higher consumption, and more interestingly, into a greater accumulation of assets which represents a long term benefit for households that are most in need.

Source: Vial, V. and J. Hanoteau, (2015) “Returns to micro-entrepreneurship in an emerging economy: A study of entrepreneurial quantile Indonesian Households’ welfare”, World Development, Vol. 74.

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