ANOTHER REASON WHY MICROFINANCE IS GOOD.

ANOTHER REASON WHY MICROFINANCE IS GOOD. Amar Bhide and Carl Schramm had an article in the Wall Street Journal of January 29 praising the emphasis on entrepreneurship in the Nobel Prize lectures by Edmund Phelps and Mohammed Yunus. They praise Phelps’s emphasis on transformative entrepreneurship in contrast to what they term the ameliorative entrepreneurship which results from microfinance. They call for broad-based modernization and ask, “What does microfinanced entrepreneurship really do for economic development?” I don’t disagree with their main argument, but I do want to respond to their question: there is great value in inculcating at the micro level market habits and market thinking (which can be regarded as human capital). I suspect that, historically, increasing familiarity with markets has been an important factor in successful economic development.