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The Small and Medium Enterprise (SME) Program at IPA discovers and promotes effective solutions to the constraints faced by entrepreneurs and SMEs in developing countries. SMEs are the largest generators of employment in the developing world, creating nearly 60% of new jobs. They also generate a myriad of opportunities across sectors and geographic areas, and employ broad and diverse segments of the labor force. SMEs in developing countries, however, face constraints that are disproportionately large compared to those faced by larger firms and by SMEs in developed countries. Limited access to finance, low levels of human capital, and difficulty accessing markets stand out as some of the most challenging barriers to business growth.

Type:
Brief
Date:
December 21, 2017
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We conduct a randomized experiment that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 16–26% higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after controlling for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs and same capital equipment, treatment firms produce higher quality rugs despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.

Country:
Type:
Published Paper
Date:
May 01, 2017
Spanish

El acceso a servicios nancieros es crucial para el crecimiento de la Pequeña y Mediana Empresa (PyME). Estos servicios permiten a los emprendedores innovar, incrementar su e ciencia, expandirse a nuevos mercados y crear nuevos puestos de trabajo. Sin embargo, la mayoría de las PyMEs en países en desarrollo son incapaces de conseguir el nanciamiento necesario para alcanzar su potencial. Proporcionar nanciamiento a las PyMEs en dichos países puede ser riesgoso y costoso para los prestamistas, lo que ha llevado a una brecha de crédito de aproximadamente un billón de dólares (IFC, 2011).

Para reducir la brecha de crédito, instituciones nancieras, gobiernos y donantes han invertido en una gran cantidad de programas y políticas orientadas a proporcionar a las PyMEs el nanciamiento necesario para crecer e innovar. No obstante, la e cacia de estos programas en reducir los obstáculos para el nanciamiento de las PyMEs no ha sido evaluada con rigor. El Programa PyME en Innovations for Poverty Action (IPA) evalúa posibles soluciones y promueve las maneras más e cientes y económicas de expandir el acceso al nanciamiento de las PyMEs.

Read the English version here.

Type:
Brief
Date:
August 12, 2016
English

Financial access is critical for the growth of small and medium-size enterprises (SMEs). It allows entrepreneurs to innovate, improve efficiency, expand to new markets, and provide millions of jobs. Yet, in developing countries, the majority of SMEs are unable to acquire the financing they need to reach their potential. Financing SMEs in the developing world can be risky and expensive for lenders, leading to an estimated financing gap of one trillion USD (International Finance Corporation, 2011).

To reduce the credit gap, financial institutions, governments, and donors invest in lending products and policies designed to provide SMEs with the financing they need to grow and innovate. However, the extent to which such programs effectively reduce the barriers to SME financing has generally not been rigorously measured. The SME Program at Innovations for Poverty Action (IPA) rigorously evaluates potential solutions and promotes the most efficient and cost-effective ways to expand access to finance for SMEs.

Lea la version en español aquí.

Type:
Brief
Date:
November 17, 2015