Determinants of Women Entrepreneurship and its Impact on Poverty Reduction in Afghanistan

Abstract

The research assesses determinants of women's entrepreneurship and examines the contribution of women's entrepreneurship in reducing poverty in Afghanistan. Despite the decades of war and conflict, as well as cultural and social barriers women have been actively participating in income-generating activities. Although women's participation in business is relatively scarce, recent dynamics in women's entrepreneurship have resulted in the creation of new jobs and opportunities for citizens. Considering the share of the women population which is approximately half of the total, women play a significant role in the overall growth and reduction of poverty. Therefore, it is of vital importance for Afghanistan to comprehend these factors as women entrepreneur activities bear a substantial influence on economic growth. This paper examines the key factor affecting women's entrepreneurship and the economic role of women in Afghanistan. Secondary data from the period of 2010 to 2019 using a panel data methodology is applied. The quantitative data were collected using an extensive questionnaire by Asia Foundation. Based on the reviewed literature a number of socio-economic factors are considered to investigate determinants of women entrepreneurship. The panel probit model is used to estimate the poverty-reducing effect of women's entrepreneurship. The result of this study reveals that education, access to the internet, infrastructure, land, leadership, ethnicity, and age are influential factors that foster women's entrepreneurship. This research applies a binary response model with instrumental variables to address endogeneity due to reverse causation. Findings show that women entrepreneurship has a poverty-reducing effect in Afghanistan.