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Constraints to the growth of small firms in Northern Myanmar

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  • Bah, El-hadj
  • Cooper, Geo

Abstract

This paper uses survey data collected from North Western Myanmar to analyze business activity and determine the most binding constraints to firm growth. While the level of entrepreneurship is very high, most firms earn low income and are small and informal with no employees. The most binding constraints are related to financing and competition. We find that informal credit constrained firms grew 8.4% less in 2008-2010. This lack of credit combined with an apparent aversion to debt, limit investment despite high returns. Returns on investments are about 73% per year, which is within the range found in other developing countries.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25482/1/DP577.pdf
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Bibliographic Info

Paper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series CIS Discussion paper series with number 577.

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Length: 35 p.
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:hit:cisdps:577

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Keywords: rural investment climate; enterprise development; poverty reduction; small firms growth; Myanmar;

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  1. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
  2. Christopher Udry & Santosh Anagol, 2006. "The Return to Capital in Ghana," Working Papers 932, Economic Growth Center, Yale University.
  3. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
  4. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
  5. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2008. "How Important Are Financing Constraints? The Role of Finance in the Business Environment," World Bank Economic Review, World Bank Group, vol. 22(3), pages 483-516, November.
  6. Inessa Love & Nataliya Mylenko, 2003. "Credit reporting and financing constraints," Policy Research Working Paper Series 3142, The World Bank.
  7. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-86, June.
  8. Geeta Batra & Daniel Kaufmann & Andrew H. W. Stone, 2004. "The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development," Microeconomics 0405004, EconWPA.
  9. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
  10. Stern, Nicholas, 1991. "The Determinants of Growth," Economic Journal, Royal Economic Society, vol. 101(404), pages 122-33, January.
  11. Hausmann, Ricardo & Klinger, Bailey, 2008. "Growth Diagnostics in Peru," Working Paper Series rwp08-62, Harvard University, John F. Kennedy School of Government.
  12. Tidiane KINDA, 2010. "Increasing Private Capital Flows To Developing Countries: The Role Of Physical And Financial Infrastructure In 58 Countries, 1970-2003," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
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