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The Economic Development Potential of Minority-Owned Businesses

Author

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  • Timothy Bates
  • Joseph Farhat
  • Colleen Casey

Abstract

The consensus view that discriminatory barriers limit the size and scope of America’s minority-business community is factually well-grounded. Rarely examined, however, is the question of why these firms are flourishing. The authors examine the scope of this growth and its causes. The process of selectively reducing discriminatory barriers inhibiting minority entrepreneurship’s development began in the 1960s, moved forward in the 1970s, and continues presently. This path-dependent process of lowering barriers has altered the incentive structures, previously making the entrepreneurial choice an unattractive one for most minorities. This, in turn, has drawn into business ownership a younger generation of highly educated and experienced minorities, many of whom have successfully obtained bank loans. Spatially, minority neighborhoods as well have successfully attracted talented, experienced African American and Latino owners and financing for their firms. Those with abundant expertise have driven the substantial gains in numbers of workers employed by minority-owned businesses.

Suggested Citation

  • Timothy Bates & Joseph Farhat & Colleen Casey, 2022. "The Economic Development Potential of Minority-Owned Businesses," Economic Development Quarterly, , vol. 36(1), pages 43-56, February.
    • Handle: RePEc:sae:ecdequ:v:36:y:2022:i:1:p:43-56
    DOI: 10.1177/08912424211032273
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    References listed on IDEAS

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    Cited by:

    1. T. William Lester & Matthew D. Wilson, 2023. "The Racial and Spatial Impacts of the Paycheck Protection Program," Economic Development Quarterly, , vol. 37(3), pages 243-258, August.
    2. Magnus Lofstrom & Timothy Bates, 2013. "African Americans’ pursuit of self-employment," Small Business Economics, Springer, vol. 40(1), pages 73-86, January.
    3. Colleen Casey & Timothy Bates & Joseph Farhat, 2023. "Linkages between regional characteristics and small businesses viability," Small Business Economics, Springer, vol. 61(2), pages 617-629, August.
    4. Nicholas Finio & Li Fang & Caila Prendergast & Gerrit-Jan Knaap, 2024. "Data on Black, Indigenous, and People of Color (BIPOC)-Owned Businesses: What's Out There and What Can Be Done?," Economic Development Quarterly, , vol. 38(2), pages 122-130, May.

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