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Promise Zones: opportunity for small businesses?

The big news is the January 8, 2014 announcement by President Obama to designate troubled neighborhoods in five cities and areas as “Promise Zones.” The goal is to use federal funding and local resources to address unemployment and poverty in troubled neighborhoods. The first five “Promise Zones will be located in the Choctaw Nation of Oklahoma, Los Angeles, Philadelphia, San Antonio, and Southeastern Kentucky.

The Center for Public Policy brief, “Promise Zones,"provides a detailed summary of the new initiative. This type of initiative is not new and has been attempted with limited success under different names. Empowerment Zones and HUBZones are current initiatives with Promise Zone like qualities. Empowerment Zones are designated urban and rural areas where employers and other taxpayers qualify for special tax incentives. SBA's HUBZone program goal is to promote economic development and employment growth in distressed areas by providing preference to federal contracting opportunities to businesses.

Empowerment Zones and HUBZones have provided a modicum of opportunity for small businesses but the success of small businesses in creating jobs and reducing poverty in the targeted zones need more evaluation. This is why there is a question mark on the opportunity for small businesses under the new, “Promise Zone,” initiative. The intent of all of the targeted initiatives is righteous and it is worthwhile for small businesses to be knowledgeable of the details of the potential opportunity provided by the Promise Zone initiative. The true virtue of entrepreneurship is addressing a need. There is consensus agreement on the need to address unemployment nationally and in particular in troubled neighborhoods. Small business development, innovation, and entrepreneurship are essential to addressing this national challenge. Hopefully the Promise Zone initiative will incorporate market driven strategies to address unemployment and poverty in troubled neighborhoods. The article, by Patrick Burns, Carrie Nguyen, and Eduardo Nihill, “Market-driven Strategies: The Key to Social Impact in Peru and Colombia,” provide insight on the potential social impact of market –driven strategies towards poverty reduction.

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