This article critiques the idea that the private sector can take the lead in addressing the capital needs of underserved communities, focusing specifically on the emerging domestic markets approach advocated by Milken Institute researchers. This approach has three limitations. First, it treats all underserved communities as interchangeable, ignoring that they differ in important ways in the nature and causes of their capital constraints. Second, it claims that underserved communities lack access to capital primarily as a result of information failure, overlooking numerous other obstacles that discourage investment in such communities. Third, its overarching assumption that the private sector can take the lead in meeting the capital needs of underserved communities is unrealistic because it fails to address these additional barriers to investment. The article recommends a more individualized approach to understanding the capital needs of underserved communities and recognition of the need for public sector leadership in solving this problem.
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