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Promoting Entrepreneurship in Vulnerable Economies

Author: Gayle Tzemach Lemmon, Senior Fellow for Women and Foreign Policy
June 28, 2012
Harvard Business Review

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In a global, hyper-connected economy, where security failures in one corner of the world can lead to an economic catastrophe on the other side of the world, it's in everyone's best interest to promote greater security and prosperity everywhere. Especially in the world's most fragile states, economic development is critical to stability.

For countries that are struggling to recover from war, negative economic shocks of just 5% can increase a country's risk of civil war. Foreign aid, which can account for to up to 97 percent of a nation's GDP, is neither a long-term nor a sustainable solution to help the citizens of these fragile countries. Promoting entrepreneurship, particularly among small- and medium-sized enterprises (SMEs), fosters more lasting, stable economic growth in the world's most vulnerable economies. Boosting SME growth has the power to diversify economies and make them far less vulnerable to sector-specific shocks and fluctuations in private capital flows.

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