Creating Capital, Jobs and Wealth in Emerging Domestic Markets: Financial Technology Transfer to Low-Income Communities
Jan 01, 2003
Glenn Yago, Betsy Zeidman, Bill Schmidt

The United States experienced such an extraordinary surge in wealth during the 1990s that even after the stock market decline of 2000-2001, Americans' total net worth in 2002 remains almost 75 percent greater than it was just 10 years ago. As with previous episodes of economic expansion, entrepreneurship and innovation, both technological and financial, fueled much of this growth. However, this growth was unbalanced, with higher-income entrepreneurs more easily accessing the full array of financial technologies and a wider range of sources of capital than smaller firms in emerging domestic markets (EDM).

This circumstance is ironic, since small businesses represent the vast majority of all firms and a driving force behind economic output and job creation. Ethnic-owned firms grew at twice the rate of all firms during the past decade, yet face capital gaps that limit their ability to expand and generate jobs in urban and low-and moderate-income (LMI) markets, home to a disproportionate amount of the increasingly diverse U.S. population.

Resolving the EDM capital gap is critical to national economic health as we experience a seemingly jobless recovery from a recession threatened by the constriction of consumer demand. Closing this gap necessitates the transfer of financial technologies and market-based public policy innovations from mainstream applications to emerging domestic markets, carving channels of capital from investors to entrepreneurs.

Built on extensive research and interviews with a wide range of financial and community leaders, Creating Capital, Jobs and Wealth in Emerging Domestic Markets demonstrates why companies should invest in such under-invested - and less competitive - markets, from low-income and rural communities to women- and minority-owned small businesses.

It includes a compendium of market leaders' activities in low- and moderate-income communities, as well as a list of "best practices" that can help address the gap between capital supply and demand in these areas.

To view an abridged version of this report, click here.