When J-PAL co-founder Esther Duflo spoke with the Aspen Network of Development Entrepreneurs (ANDE) last fall, she delivered a message that strongly resonated with both organizations: evidence is not about confirming what we already believe, but about discovering what truly makes a difference. She also highlighted the long-term ambition behind evidence-based entrepreneurship support—to help small firms grow into mid-sized enterprises that can sustain expansion, generate stable employment, and integrate into global markets. Her insights underscored both the importance of entrepreneur-led development and the need to rethink how support is designed and delivered.
Over the years, policymakers and implementation leaders have increasingly viewed entrepreneurship as a pathway to job creation in low- and middle-income countries (LMICs). Drawing on extensive experience and ongoing conversations with research and implementation partners, several practical lessons are emerging about how to make this pathway more effective.
Small, dynamic businesses account for an estimated 50 to 90 percent of employment across LMICs. Despite their importance, these firms face persistent barriers, including limited access to finance, talent shortages, and the challenge of transitioning to low-emission economies. Yet only a small share of international development assistance—around three percent—has traditionally focused on helping them overcome these constraints. While direct support to individual businesses can create jobs, lasting impact depends on addressing the broader conditions that shape entrepreneurial success.
Entrepreneurship does not happen in isolation. Businesses thrive or struggle depending on the surrounding ecosystem of investors, mentors, policies, institutions, and market opportunities. These interconnected systems, known as entrepreneurship ecosystems, determine whether firms can start, survive, and scale. Enterprise Support Organizations (ESOs), such as accelerators and incubators, play a critical role by helping entrepreneurs access capital, build capabilities, and connect to markets. Strengthening these organizations can ease growth bottlenecks and enable more durable job creation. For instance, tailored business consulting has proven effective in improving firm performance, yet adoption remains limited. Researchers increasingly point to the need for affordable, locally delivered services that make proven practices accessible and sustainable over time.
A growing body of evidence on firm growth is also helping practitioners and researchers refine how entrepreneurs are supported. Smarter targeting has shown promise by directing resources toward firms with higher growth potential and tailoring financial or technical support to their specific needs. In some cases, non-traditional data—such as performance in business plan competitions, community recommendations, or personal characteristics of founders—combined with advanced analytics have helped predict business success more accurately. Investing in such tools allows ESOs to focus efforts where they can have the greatest impact.
Connecting businesses to markets is another powerful lever. Programs that facilitate trade, e-commerce, and procurement often increase sales and employment by linking small and mid-sized firms to new buyers and to one another. These relationships also transfer valuable know-how, making local businesses more productive. Similarly, collaborative learning between researchers and practitioners has driven meaningful improvements in program design. Evidence from initiatives like the Global Accelerator Learning Initiative revealed that some acceleration programs unintentionally worsened gender disparities in financing, prompting organizations to introduce gender-focused acceleration models.
For donors and policymakers committed to job creation and inclusive growth, these insights point to three critical shifts. First, funding should prioritize organizations, not just individual programs. Supporting ESOs to build internal capabilities, data systems, and networks requires longer-term and more flexible funding, but it enables them to specialize, measure impact, and scale solutions that meet real market needs. Second, continued investment in evidence is essential—not only through research, but also through stronger data systems and partnerships that translate findings into practice. Finally, a systemic perspective is needed. Success should be measured not only by the number of firms supported, but by whether entire ecosystems become more resilient, inclusive, and aligned.
Stronger entrepreneurship ecosystems create scalable pathways for business growth, foster trust and collaboration, and improve access to markets and resources well beyond individual firms. By thinking beyond entrepreneurs alone and investing in the systems that surround them, development efforts can unlock more sustainable job creation and long-term economic growth in low- and middle-income countries.
