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Why do Minority Business Development Programs Generate so Little Minority Business Development?

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  • Timothy Bates

    (Wayne State University)

Abstract

Minority enterprise assistance programs are largely failures. They are flawed in intent, design, and implementation. Current minority business enterprise (MBE) loan programs share three flaws: (1) Lending is targeted to overcrowded lines of business with low profits, (2) tiny loans flow to marginally viable firms, and(3) consequent high-loan default rates erode funds available for relending. Three types of problems must be dealt with if MBE assistance is to be a useful tool for generating economic development: (1) Geographic targeting of MBE assistance to poor ghetto neighborhoods should be sharply reduced, (2) targeting aid to low-income individuals should be eliminated, and (3) poorly administered programs that destroy MBEs and encourage fraud should be reformed or eliminated.

Suggested Citation

  • Timothy Bates, 1995. "Why do Minority Business Development Programs Generate so Little Minority Business Development?," Economic Development Quarterly, , vol. 9(1), pages 3-14, February.
    • Handle: RePEc:sae:ecdequ:v:9:y:1995:i:1:p:3-14
    DOI: 10.1177/089124249500900101
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    Cited by:

    1. William D. Bradford, 2014. "The “Myth†That Black Entrepreneurship Can Reduce the Gap in Wealth Between Black and White Families," Economic Development Quarterly, , vol. 28(3), pages 254-269, August.
    2. James J. Chrisman & Jess H. Chua & Lloyd P. Steier, 2002. "The Influence of National Culture and Family Involvement on Entrepreneurial Perceptions and Performance at the State Level," Entrepreneurship Theory and Practice, , vol. 26(4), pages 113-130, July.
    3. Marshall, Maria I. & Peake, Whitney O., 2006. "What Do We Really Know About Entrepreneurs? An Analysis Of Nascent Entrepreneurs In Indiana," Staff Papers 28622, Purdue University, Department of Agricultural Economics.
    4. Timothy Bates, 2009. "Utilizing Affirmative Action in Public Sector Procurement as a Local Economic Development Strategy," Economic Development Quarterly, , vol. 23(3), pages 180-192, August.
    5. Mark Schreiner, 1999. "Lessons for Microenterprise Programs from a Fresh Look at the Unemployment Insurance Self-Employment Demonstration," Evaluation Review, , vol. 23(5), pages 504-526, October.
    6. Lisa J. Servon, 1997. "Microenterprise Programs in U.S. Inner Cities: Economic Development or Social Welfare?," Economic Development Quarterly, , vol. 11(2), pages 166-180, May.
    7. Manuel Carvajal, 2006. "Economic grounds for affirmative action: The evidence on architects and engineers in South Florida," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 515-538.
    8. Wellalage, Nirosha Hewa & Reddy, Krishna, 2020. "Determinants of profit reinvestment undertaken by SMEs in the small island countries," Global Finance Journal, Elsevier, vol. 43(C).
    9. Kevin Mole & Joan-Lluís Capelleras, 2018. "Take-up and variation of advice for new firm founders in different local contexts," Environment and Planning C, , vol. 36(1), pages 3-27, February.
    10. Christy, Ralph D. & Wenner, Mark D. & Dassie, Wylin, 2000. "A Microenterprise-Centered Economic Development Strategy For The Rural South: Sustaining Growth With Economic Opportunity," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(2), pages 1-14, August.
    11. Lisa J. Servon, 2006. "Microenterprise Development in the United States: Current Challenges and New Directions," Economic Development Quarterly, , vol. 20(4), pages 351-367, November.
    12. Jack I. Richter & Pankaj C. Patel, 2022. "Impact of the COVID-19 pandemic on the hours lost by self-employed racial minorities: evidence from Brazil," Small Business Economics, Springer, vol. 58(2), pages 769-805, February.
    13. Tendler, Judith & Amorim, Monica Alves, 1996. "Small firms and their helpers: Lessons on demand," World Development, Elsevier, vol. 24(3), pages 407-426, March.

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