Incorporating Entrepreneurs of Color into State Economic Development Plans is Imperative.

State law requires the governor to present an economic development strategy to Congress every four years. These plans establish priorities for maintaining the Commonwealth’s competitiveness and are developed with input from a council of business and civic leaders. Recently, Governor Healy announced an effort to begin this economic development planning process in a statement to MassBio, an industry group. It is worth noting that the governor announced the news in front of this audience, as the life sciences industry accounts for a large share of the state’s economic output, but is also one of the hardest industries to get into for black and Latinx entrepreneurs.

A strong economic development strategy must include a coherent set of strategies to address large racial and ethnic disparities in corporate ownership, especially in future industries such as life sciences. The Comprehensive Entrepreneurship Promotion Act, which includes a clause mandating a strategy that addresses racial and ethnic disparities in business ownership, is still under consideration. However, the Healy-Driscoll administration does not need a legal obligation to make fair entrepreneurship a central pillar of its economic development plans.

Enabling all residents to successfully start and grow small businesses is critical to future economic growth in an increasingly diverse Commonwealth, as MassINC details in their 2021 research report. Equitable access to entrepreneurship is also essential to bridging the racial gap between rich and poor, as business ownership is one of the major sources of racial and ethnic inequality in financial wealth. Governor Healy has already demonstrated leadership in strategies to help more people of color start small businesses, most notably by expanding access to early college and proposing a substantial increase in funding for state financial assistance.

Moreover, small businesses face challenges in accessing traditional capital markets, hindering growth. Resources like the Small Business Technical Assistance program and Community Development Finance Institutions (CDFIs) enable community-based organizations to provide technical assistance services and make capital accessible to businesses that would otherwise not be eligible for traditional financing. Deliberate policies on supplier diversity and sourcing are also important tools for providing entry points into highly lucrative but historically inaccessible markets.

Economic development planning is an opportunity to develop sound strategies to support entrepreneurs of color in an environment where access to capital has become extremely difficult. Throughout the pandemic, blacks and Latinos have set up businesses at an unprecedented pace with help from federal recovery funds. This entrepreneurial spirit has reversed decades of declining SME startup rates. The state needs a sound plan to keep the growth trend of businesses of color in the right direction. Efforts to grow and sustain specialized small business technical assistance providers and community development financial institutions are integral to this element of the plan.

Small businesses create places and enrich communities. In the face of the pandemic and virtualization, the economy’s focus must not only be on large companies and sectors but also on smaller companies to remain competitive and attract those who call Massachusetts home. The Healey-Driscoll strategy presents an opportunity to make a firm break with the past, where the needs of entrepreneurs of color were ignored by policymakers until it was too late.

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