Gender and Entrepreneurship Workshop Capacity Building for Implementation of the GAP in ECA by Sarosh Sattar Senior Economist October 23, 2008

Workshop on Capacity Building for Implementation of the GAP in ECA 2 Outline How to think about entrepreneurship?  Why care about entrepreneurship?  Definition  Literature on entrepreneurship Some basic questions for the ECA region Some preliminary findings

Workshop on Capacity Building for Implementation of the GAP in ECA 3 Why care about entrepreneurship? Entrepreneurship  contributes to economic growth and leaps in human progress  offers potential of greater wealth and upward mobility  provides an alternative to wage employment

Workshop on Capacity Building for Implementation of the GAP in ECA 4 Defining entrepreneurship Many definitions  Anyone who is working for themselves and retains profits  Anyone who owns an enterprise with workers  Anyone who owns an enterprise with workers for at least 1-3 years

Workshop on Capacity Building for Implementation of the GAP in ECA 5 Literature on entrepreneurship Entrepreneurial Intention Social Capital Human Capital Attitude Subjective norm Perceived behavioral control Actual involvement in Entrepre- neurship Autonomy Financial success Status

Workshop on Capacity Building for Implementation of the GAP in ECA 6 Some relevant questions on entrepreneurship Can household characteristics explain why women are less likely to be self-employed than men?  Are households maximizing welfare through risk mitigation policies? Do women face different constraints to entrepreneurship than men?  Are women harassed more than men?  Are women more averse to paying bribes than men?  Are legal or illegal hurdles too costly for women’s time? Do female-owned firms perform comparably to male-owned firms?

Preliminary Findings

Workshop on Capacity Building for Implementation of the GAP in ECA 8 Fewer women entrepreneurs and self-employed

Workshop on Capacity Building for Implementation of the GAP in ECA 9 Women run smaller operations

Workshop on Capacity Building for Implementation of the GAP in ECA 10 Main Findings on Firm size Significant gender bias in firm size ( # of employees) against women Secondary education is important for women, positively correlated with the firm size Women face red tape barriers, for them firm size is significant and positively related with paying bribe Being in a civic group does not help women having a larger firm compared to men Being employed in the same field where they got formal training does not help women having a larger firm compared to men Women tend to have own larger firms in high income regions

Workshop on Capacity Building for Implementation of the GAP in ECA 11 BEEPS data on formal enterprises show that… Women owned firms are  smaller scaled operations in terms of sales revenues  generate more profit per unit of sales revenue  have higher returns to scale which means that women would gain more from increasing their firm size This could be because women are  capital constrained  concentrated in industries with small firm size

Some questions

Workshop on Capacity Building for Implementation of the GAP in ECA 13 Interesting questions Why do women concentrate in certain sectors (services rather than manufacturing)? Is the capital constraint self-imposed or does it reflect bias in the financial system? Do lower entrepreneurship rates among women reflect personal choice or economic constraints? What encourages women to take the step into entrepreneurship?