Small farm productivity in sub-Saharan Africa lags behind that in Asia and other parts of the world. One reason for this may be low rate of adoption of inputs such as fertilizer. In Tanzania one reason for this may simply be the absence of local retailers, especially in more remote areas. Researchers are testing if their absence may be because of the costs of entering these markets or demand, with interventions targeted to each.
Industrial sector development is seen as an important poverty alleviation strategy for reducing un- and underemployment in low-income countries. But how those jobs affect workers, particularly in early stages of industrial sector development, and the extent to which workers prefer these jobs over others is less well-understood.
Incentive (or performance-based) pay has been shown to increase worker productivity in high-income countries, yet it is uncommon in developing countries and little evidence exists on the impacts of individual- and group-level incentives in these contexts. Cultural norms, such as the desire to stand out or get ahead, may influence how people respond to incentives.
Female entrepreneurs in developing countries often face significant stress from the combination of long working hours, family responsibilities and barriers to work that requires being away from home1,2. This randomized evaluation studied whether targeting women’s ability to cope with such daily stresses could help improve well-being and business outcomes.
Governments often implement a number of policies intended to support small and medium size enterprises (SMEs) to grow and expand. One such government tool is to use tax breaks to reward small and medium-sized firms for investing. While such investment tax credits are widely practiced, there is limited evidence on the effectiveness of these policies in promoting firm investment, employment, or growth.
Of the two billion people living on less than $2 per day, roughly half run a business. Finding effective approaches to enhance the productivity and performance of these businesses is considered key to economic growth in many developing economies.
A large theoretical literature suggests that public information can substitute for formal contract enforcement – businesses concerned about maintaining a good reputation will be more inclined to follow through on commitments. However, little is known about the extent to which reputation helps enforce informal business agreements in practice, or about the channels through which information of this type impacts trade.
For small and medium firms everywhere, the lack of access to buyers can often mean higher transaction and input costs and few incentives to improve efficiency. Governments, however, have strong buying power and increased government purchasing from these firms may help with this constraint. This study uses procurement auctions by Brazil’s federal government to test if the added demand from government improved the performance of winning firms.
Microenterprises make up a large portion of employment in the developing world but little is known about constraints on their growth. Researchers partnered with the consulting firm Ernst & Young to test whether providing tailors in Accra with individualized consulting, a sizable cash grant, or both can facilitate growth.
Helping microenterprises grow can provide livelihoods and drive economic growth in developing countries, but research on using loans to spur small business growth has generally found these to be unable to help microenterprises expand.
Millions of people make their living running microenterprises, but these businesses typically fail to expand or provide more than subsistence-level income to their owners. Giving loans and training to small businesses offer the possibility of helping them grow, but research has not found this to be effective. Yet, much of the existing evidence looks at women-owned businesses, as they are the primary recipients of microfinance programs.
Policymakers in countries dominated by small and medium-sized firms face challenges in spurring them to grow and hire more workers. In particular, it has been difficult to distinguish entrepreneurs with potential for growth from their “subsistence entrepreneur” peers. Researchers used a national business plan competition in Nigeria to test if selecting winners and offering them $50,000 cash could encourage their firms to grow.
Differences in management quality are an important contributor to productivity differences across countries. A key question is how best to improve poor management in developing countries. This evaluation tested two different approaches aimed at improving management in Colombian auto parts firms. The first was an intensive and expensive one-on-one consulting, while the second provided consulting to small groups of firms at approximately one-third of the cost of the individual approach.
In perfectly competitive markets, higher valued agricultural products should translate into higher prices, putting more money in the pockets of farmers. However, changes in value tend to reach producers at a lower rate in developing economies, which may be a result of the nature of the relationships between farmers and traders in this context.
Small and medium enterprises (SMEs) are often important parts of developing country economies, but many programs designed to spur their growth have been unsuccessful. In Egypt, researchers offered small-scale rug manufacturers the opportunity to export to high-income countries. They found that SMEs offered export opportunities increased both their profits and product quality relative to firms in a comparison group.