To boost jobs in low- and middle-income countries, support more than just entrepreneurs

When J-PAL co-founder Esther Duflo spoke with Aspen Network of Development Entrepreneurs (ANDE) last fall, she shared a message that resonated deeply with both our organizations: "Evidence is not about confirming what we believe; it’s about discovering what actually makes a difference." 

Esther also emphasized the long-term goal of supporting entrepreneurs with this evidence: “The goal should be to help small firms become mid-sized enterprises that can sustain growth, create stable employment, and integrate into global markets.” She captured why entrepreneur-led development matters, and why we need to rethink how to improve it by putting evidence to work.

We’ve had the privilege of working with many policymakers and implementation leaders committed to making entrepreneurship a pathway for job creation. Drawing on our experience and recent conversations with partners across research and implementation, we’re sharing actionable ideas.

Seeing a bigger picture: Why entrepreneurship ecosystems matter

Small, dynamic businesses drive 50-90 percent of employment across low- and middle-income countries (LMICs). These businesses face daunting challenges, from lack of access to financing and talent to transitioning to lower emission economies. Yet only about 3 percent of international development assistance has traditionally focused on helping them overcome these challenges. Direct support to individual businesses can help create jobs, but understanding the broader conditions that shape entrepreneurial success is key to making development assistance programs more effective.

Entrepreneurship doesn't happen in isolation. It can thrive, or struggle, depending on the surrounding web of organizations and conditions, including investors, mentors, enabling policies, and market opportunities. Entrepreneurship ecosystems are the interconnected network of organizations, policies, and market linkages that allow entrepreneurs to start and grow businesses. Enterprise Support Organizations (ESOs)—accelerators, incubators, and other intermediaries—play a unique role here by helping firms access capital, build capabilities, and connect to markets. 

Strengthening these ecosystem actors can help ease bottlenecks and foster more durable job creation and business growth. For example, tailored business consulting is a solution that can improve how entrepreneurs run a business and grow it, yet uptake remains low. Researchers also recommend developing markets for affordable, locally provided services to make proven practices more accessible and sustainable.  

Using evidence to improve how organizations support entrepreneurs

An expanding evidence base on firm growth is helping practitioners and researchers learn faster, share lessons, and improve programs. Here are a few highlights:

Smarter selection: Improving targeting to focus support to entrepreneurs with the highest growth potential, and tailoring financing or other support to their needs can unlock their potential to grow their businesses, create jobs, and strengthen the local economy. 

Non-traditional data like performance in business plan competitions, community input, and personal characteristics of business owners, sometimes combined with machine learning, have been able to predict entrepreneurial success and growth. By funding innovations for tools that identify and target high-potential firms, donors can help ESOs create more impact.

Building market connections: Linking businesses to new markets with programs that facilitate trade, e-commerce, and procurement programs often boost sales and employment by connecting small and mid-sized businesses to new buyers, and to each other. The know-how gained from these connections with buyers can also make local businesses more productive. By investing in programs that broker connections between small firms and large buyers, programs can fuel businesses to grow faster and longer.

Collaborative learning: Collaborative research initiatives directly inform and improve practical support programs. For example, Global Accelerator Learning Initiative (GALI) findings revealed that acceleration services often exacerbate gender inequities in financing, prompting organizations like the Sasakawa Peace Foundation (SPF) to design specific gender-lens acceleration programs. 

By supporting organizational capacity building, particularly technical assistance for collection and strategic application of data, donors enable ESOs to match local entrepreneurs’ specific needs to their own capabilities and play a more specialized role within a higher performing ecosystem. These ESOs will also produce higher quality data on the performance of the businesses they support, enabling researchers to learn faster.

Three broader shifts for donors and policymakers

If we're serious about job creation, inclusive growth, and building low-emission economies in LMICs by leveraging entrepreneurship, we need to make three shifts:

1. Fund organizations, not just programs. Support ESOs to build capabilities, systems, and networks, not just deliver services. This requires longer funding horizons and flexibility for organizational development. The most effective ESOs are data-driven specialists that rigorously measure impact and refine offerings to meet clear market needs. Donor funding should empower them to identify these high-impact niches and scale solutions. Investing in organizational capacity enables ESOs to find the best match between business needs and market demand, drawing in market forces to multiply their impact.

2. Invest in evidence. Support research on what works, under what conditions, and for whom, like the evidence above. At the same time, invest in better data and stronger partnerships between researchers and practitioners to turn insights into more effective programs. Continued learning between these different actors is essential. 

Donors can strengthen these partnerships to make sure all parties benefit from faster learning and practical application. More ambitious studies designed for scale and systems change, including those evaluating ecosystem-based interventions, will help build stronger and more useful learning cycles for everyone involved.

3. Think systemically. Success isn’t just about how many firms receive support, but whether whole markets or ecosystems become stronger and more inclusive. Are there missing pieces of critical infrastructure or a weak link that needs strengthening? Can local institutions such as universities based in LMICs serve as ecosystem enablers? Do organizations collaborate and form a spectrum of support, or are they fiercely competitive and duplicate each other’s efforts? 

An aligned ecosystem is essential to create scalable pathways for many entrepreneurs, foster trusted networks, and improve access to markets and resources beyond the immediate businesses, leading to a more sustainable model of support over time.