By Mimi Whitefield
The Miami Herald
There’s little doubt that Latin American and Caribbean people are entrepreneurial. Nearly one in three workers in the region is self-employed or a small employer.
While there is no shortage of regional enterprises, the problem is that most are very small — even after decades of operation, according to “Latin American Entrepreneurs, Many Firms but Little Innovation,” a new World Bank report released Thursday in Miami.
“More than half of employees in Latin America are employed in small firms — and by small firms we mean five employees or less,” said Augusto de la Torre, the World Bank’s chief economist for Latin America and the Caribbean. “In Latin America, we tend to begin small and stay small.”
And these small employers don’t generate enough well-paying jobs, said de la Torre, who unveiled the report at a joint entrepreneurship event with the Wall Street Journal at the Four Seasons Hotel.
Many of the region’s small firms are informal, meaning they operate outside the mainstream economy, don’t pay taxes and aren’t monitored in any way by governments.
The traditional development approach in the region has been to focus on these small firms to help them grow, create jobs and join the formal economy, said de la Torre. But he noted there are many formal firms in Latin America and the Caribbean that are very small, too. Researchers also found that large firms are creating more jobs than the small firms that become formal.