Microcredit and Development Policy

Microcredit is a grassroots development strategy that grants small-scale loans to poor borrowers for self-employment projects that generate income. Microcredit, along with other grassroots approaches, offers an alternative to the top-down macroeconomic approaches that have characterized policies in developing countries since World War II. Aside from a few high profile success stories, the top-down approach has failed. The vast majority of people living in developing countries still suffer from extreme poverty and underdevelopment. While effective macropolicies remain necessary for any successful development strategy, the need for complementary microstrategies at the grassroots level has become apparent. Among the various grassroots approaches, microcredit not only shows unique promise in alleviating poverty, but also offers the poor a better future through self-reliance. While positive microcredit benefits have begun to emerge in evaluations, scholars still debate the proper role of microcredit in overall development policy. The purpose of this book is to address the major policy issues surrounding the use of microcredit as a tool for economic and social development.