An Evaluation of Alternative Strategies for Expanding the Number of Black Owned Businesses

An Evaluation of Alternative Strategies for Expanding the Number of Black Owned Businesses

1974Working Paper No. 206

Alternative strategies for Black economic development have been debated with great vigor and little rigor. The qualitative, nonanalytic nature of the existing Black economic development literature partially stems from the lack of comprehensive financial information on the problems and prospects of potential and existing Black businesses. In contrast, the present Study is quantitatively oriented: it examines samples of Black-owned and White-owned businesses formed in central city areas between 1967 and 1970. All of the firms being considered received loans from banks or the Small Busi- ness Administration (SBA). Two distinct strategies for increasing the size and scope of the Black business community will be evaluated in termsof effectiveness in achieving two related, but distinct, sets of Black economic development goals. By restricting attention to urban, Black-owned firms and a comparison group of White inner-city businesses, we are necessarily many of the myriad proposals advanced for promoting Black economic development, but we are isolating a number of important and resolvable problems. The insights thereby gained will hopefully provide some useful information regarding the feasibility of a variety of more ambitious programs for Black economic development.