Micro Entrepreneurship the Concept of Term Paper

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Access to credit is a significant barrier to entry for many entrepreneurs, especially in the developing world. Often, people cannot afford to start or expand a business because they have no access to capital. With microcredit, this gap is bridged and entrepreneurs in the developing world can have access to capital. This helps to encourage such individuals to open business, or to expand their business.

Beyond the financial aspects, the psychological aspects of microcredit also are important in fostering entrepreneurial activity in the developing world. Entrepreneurs, who previously knew little support, are likely to respond positively knowing that there are people who believe in their abilities, their integrity and their business model. Sometimes just knowing that people have faith in you can help your motivation to work harder and build the business. Knowing that further capital can be acquired down the road if need be is also critical, because it encourages long-term thinking in the development of the business.

6. International development is aided by microlending and microentrepreneurship as well. Economic growth in the developing world depends largely on foreign direct investment, which is a transfer of wealth from one region to another. What microlending does is direct FDI to small businesses, whereas the normal global financial system only directs these flows to large companies.

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Ultimately, it is important that foreign capital flows find their way to small businesses and to consumers, spurring consumer spending. By creating stronger small businesses and therefore infusing more capital into small and rural communities, microlending and microentrepreneurship foster development on the small scale. The impact of this, however, is economic growth in the developing world and more economic activity in general.

This opens up opportunities for firms of all types, as nations in the developing world improve their wealth by fostering economic activity. In addition, the improved activity provides optimism for all elements of society, not just the ones that receive the loans. The small entrepreneurs become beacons of success in their communities, showing all the people in the community what is possible. This raises hope and optimism throughout the community, to the benefit of everybody. Internationally, this has a "trickle up" effect, where the purchasing power of the developing world nation improves and that nation has more confidence to operate on the world stage, knowing that it has talent and homegrown….....

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