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Fostering a newly defined entrepreneurship in impoverished communities: A key component of the solution for eradicating poverty in America

  • Year: 2008
  • Author: Sinha, Sachidanand
  • Journal Name: ProQuest Dissertations and Theses
  • Publisher: University of Southern California
  • Published Location: United States -- California
  • ISBN: 9780549610168
  • Country: United States

This study takes a fresh look at why high levels of poverty persist in certain American neighborhoods despite billions of dollars having been invested over decades by the government. To overcome this problem, the author proposes a New Entrepreneurial Initiative (NEI) as a policy solution. The thesis of the NEI is that to eradicate persistent poverty it is essential to foster self-reliance in the affected communities through entrepreneurial innovations.

Income subsidy programs, although temporarily helpful, cannot banish long-term poverty because they do not remedy impoverishment of capability, a strong component of the poverty equation, as demonstrated by Sen (1992, 1997,1999). Furthermore, persistent poverty is not entirely an individual phenomenon. The neighborhoods and spaces in which the poor live play important roles in poverty's continuance. Thus any solution paradigm should involve the community or neighborhood as an important actor. The poverty eradication formula must structurally transform the community's economy from poverty and isolation to prosperity. For that reason, two important economic concepts have played significant roles in the design of the NEI. First is the Shumperian (1934/1983) concept of "economic development" where entrepreneurial innovations structurally transform an economy to a new level. The second is the concept of "Community Economic Development" (Diochon 2003) where community participation is critical in achieving economic development.

Because poverty among blacks is the most extreme and concentrated in the nation, NEI's first launch will be in impoverished black communities. The evidence suggests that, under the right circumstances with enabling assistance, some members of impoverished black communities, through innovation, will be able to turn challenges into economic opportunities. The NEI incorporates a comprehensive entrepreneurial support system for technical assistance and mentoring. It also has a provision for a public venture capital system that can finance innovative enterprises. Since the private venture capital industry does not finance moderate growth enterprises, no matter how innovative, public venture capital will have to take up the challenge.

The NEI is not poverty specific. It is innovation specific. It can be expanded to finance innovations in new energy technologies and manufacturing around the country in order to enhance American competitiveness.

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