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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:How can we learn whether firm policies are working in Africa? Challenges (and solutions?) for experiments and structural models
Author:McKenzie, DavidISNI
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]
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