Over the last year, Copenhagen Economics has provided the World Bank with 24 articles that highlight topics of current interests in regard to trade and development in less developed countries. One of the recent highlights was on the topic of microcredit, which Muhammed Yunus and the Grameen Bank since have been awarded the Nobel Peace Price for. You can read the highlight here: In less developed countries (LDCs), poor people may be trapped in poverty due to a lack of finances for starting up small enterprises. Microcredit is a way of providing very small loans to ‘unbankable’ individuals struggling with poverty. As little as $25 can be enough for a business to overcome start-up barriers and often even less is needed to generate more profits. For instance, in Burkina Faso Ms Zarata is serving cooked rice from a small restaurant in a marketplace. By taking out a series of microcredit loans she was able to buy rice wholesale rather than retail and thereby increase her profits. She now employs seven people, and is able to pay her children’s school fees. Of course, not all microcredit recipients experience the same level of success as Ms Zarata. However, microcredit does seem to be a powerful tool in reducing the number of people living below the poverty line. In fact, studies show that among Bangladesh’s poorest who received no credit service of any kind, only 4% pulled themselves above the poverty line over an eight year period while the percentage was 48 for those who did receive microcredit. Furthermore, microcredit seems to empower women in particular as 90% of all micro-credit is paid out to women. Since women in many LDCs are responsible for family planning and the children’s education, more wealth accruing to women could prove beneficial for the future generations, and thus the future wealth in LDCs. The following articles elaborate on microcredit in less developed countries. Further information: Partner Martin Hvidt Thelle Articles Basic facts about microfinance The Microcredit Summit Campaign Report Africa’s women go to work Expanding microcredit outreach to reach the Millennium Development Goal – some issues for attention Microcredit: Reducing poverty and empowering communities Micro credit gathers force Microfinance and poverty: Evidence using panel data from Bangladesh