Until recently, development economists tended to assume a role for private enterprise in reducing poverty, but they didn't articulate it explicitly. The new institutional economics literature, with its emphasis on transaction costs, addresses the environment in which private businesses operate in various countries - the "investment climate."

Building on this new thinking, Pathways Out of Poverty begins by citing the worldwide drop in the number of very poor people and goes on to identify the ways in which private firms and farms contribute to economic mobility and poverty reduction and what governments can do to enhance this contribution. In four Parts, the editors and contributors address economic mobility, offer numerous global examples, consider the importance of good investment climates, and examine the impact of public policies and public attitudes. Their theory, hard economic analysis, and case studies provide rich and innovative mechanisms for reducing poverty in developing and transition countries.

Until recently, development economists tended to assume a role for private enterprises in reducing poverty, without articulating it explicitly. How private firms contribute to economic mobility and poverty reduction and what governments can do to enhance their contribution is the theme of this book. In developing countries, private enterprise is far and away the largest source of employment and investment and a significant source of government revenue. In addition to these tangible contributions, private enterprise is an important source of less tangible, but critically important, factors such as openness to ideas, innovation, and opportunity. The book presents new evidence, which demonstrates the essential role which private firms are playing in the course of economic development. Throughout, the focus is on economic mobility. Regional case studies ranging from the Far East to Sub-Saharan Africa hone in on the role of entrepreneurship in development. Drawing on the rich materials of the World Bank's Worldwide Business Environment Survey, key policy factors are identified. Special attention is paid to obstacles facing small and medium-sized enterprises. The concluding chapters focus on practical ways in which governments of developing and transition countries can encourage the capacity of poor people to move up the economic ladder.