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| Title: | How can we learn whether firm policies are working in Africa? Challenges (and solutions?) for experiments and structural models |
| Author: | McKenzie, David |
| Year: | 2011 |
| Periodical: | Journal of African Economies (ISSN 0963-8024) |
| Volume: | 20 |
| Issue: | 4 |
| Pages: | 600-625 |
| Language: | English |
| Geographic term: | Subsaharan Africa |
| Subjects: | industrial policy productivity small enterprises |
| External link: | https://jae.oxfordjournals.org/content/20/4/600.full.pdf |
| Abstract: | Firm productivity is low in African countries, prompting governments to try a number of active policies to improve it. Yet despite the millions of dollars spent on these policies, we are far from a situation where we know whether many of them are yielding the desired payoffs. This article establishes some basic facts about the number and heterogeneity of firms in different sub-Saharan African countries and discusses their implications for experimental and structural approaches towards trying to estimate firm policy impacts. It shows that the typical firm programme such as a matching grant scheme or business training programme involves only 100 to 300 firms, which are often very heterogeneous in terms of employment and sales levels. As a result, standard experimental designs will lack any power to detect reasonably sized treatment impacts, while structural models which assume common production technologies and few missing markets will be ill-suited to capture the key constraints firms face. Nevertheless, the article suggests a way forward which involves focusing on a more homogeneous sub-sample of firms and collecting a lot more data on them than is typically collected. Bibliogr., notes, ref, sum. [Journal abstract] |
