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microenterprises

Fixing financial markets when other key markets are broken, too: Guest post by Alex Cohen

This is the eleventh in our series of posts by students on the job market this year
Researchers, policymakers and aid organizations have devoted lots of attention to improving access to credit and, increasingly, insurance for small firms and farms in developing countries. Yet some recent papers find puzzlingly weak effects of insurance and credit on growth and profits (Cole et al. 2014, Banerjee et al. forthcoming).
 One potential explanation may be that in developing countries, it’s not just financial markets that have imperfections, but that other key markets, such as markets for labor and land, have problems, too. In particular, high costs of supervising or finding trustworthy employees may make it expensive to add labor (Eswaran and Kotwal 1986, Fafchamps 2003, Foster and Rosenzweig 2011). For farms specifically, missing land markets may further constrain expansion (Goldstein and Udry 2008, Adamopoulos and Restuccia 2014).

A Technology Letdown: Efforts at using RFID technology to track microenterprise inventories

David McKenzie's picture
Measuring microenterprise profits is hard. Most owners of these small firms keep no records and have very volatile incomes.  Asking firm owners what their profits are can lead to high refusal rates, noisy data, trouble with recall, and then there is the added concern that reporting may change with interventions  (either because an intervention like business training changes recording, or because people who get given finance may want you to think it has benefited them).

Testing different behavioral approaches to get people to attend business training

David McKenzie's picture

A while back I blogged about work using active choice and enhanced active choice to get people to get flu shots and prescription refills. The basic idea here is that relatively small modifications to the way a choice is presented can have large impacts on the take-up of a program. This seemed useful in the context of many of our training programs– attendance rates averaged 65 percent in a review of business training programs I did with Chris Woodruff. Therefore for an ongoing evaluation of the GET AHEAD business training program in Kenya, we decided to test out this approach.
 

Insuring small firms against big political and economic risks: an experiment in post-revolution Egypt

David McKenzie's picture
The Arab Spring brought about a wave of joy in many countries in the Middle East and North Africa as repressive regimes that had ruled for years were overthrown. But the aftermath brought about considerable turmoil and uncertainty as to what was going to happen in many countries. In Egypt, the immediate aftermath of the January 2011 revolution which toppled Hosni Mubarak included closing the stock market for 55 days, curfews of up to 18 hours a day, and an interim government under the control of the Armed Forces.

More on the “just give them cash” debate for small business growth

David McKenzie's picture
There has been a lot of recent debate and discussion about the role of cash grants in aid, and whether aid is more effective when simply given as unrestricted cash compared to approaches such as conditional transfers which try to restrict how recipients use any money received. Traditionally this debate has centered around food aid and education funding, but more recently this discussion has also arisen with respect to funding small businesses.

Misadventures in Photographing Impact

David McKenzie's picture

One of my favorite papers to present is my paper on improving management in India, in part because we have wonderful photos to illustrate what bad management looks like and what improved practices look like (see the appendix to the paper for some of these).  Photographing impact isn’t only useful for presentations and glossy summaries, but may potentially offer a new form of data. However, this is easier said than done, and today I thought I’d share some misadventures in trying to photograph impacts on small firms.

Give a man a fish and feed him for life? Experimental evidence on the long-term effects of grants on Sri Lankan Microenterprises

David McKenzie's picture

Typical policies to improve the incomes of poor households and their businesses are based on the sustained provision of services – be it microfinance with multiple loan cycles and regular meetings; conditional cash transfers with regular transfers over a period of years; or business training programs which are based on the idea that capital along is not enough – as in the proverb “give a man a fish and he eats for a day, teach a man to fish and he can feed himself for life”.

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