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What are we learning from business training and entrepreneurship evaluations around the developing world ?

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  • McKenzie, David
  • Woodruff, Christopher

Abstract

Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. This paper undertakes a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. It finds that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. The paper concludes by summarizing some directions and key questions for future studies.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6202.

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Date of creation: 01 Sep 2012
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Handle: RePEc:wbk:wbrwps:6202

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Keywords: Financial Literacy; Primary Education; Access&Equity in Basic Education; Education For All; Competitiveness and Competition Policy;

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References

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  1. Mano, Yukichi & Iddrisu,, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2011. "How can micro and small enterprises in Sub-Saharan Africa become more productive? the impacts of experimental basic managerial training," Policy Research Working Paper Series 5755, The World Bank.
  2. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," IZA Discussion Papers 3743, Institute for the Study of Labor (IZA).
  3. David McKenzie, 2010. "Impact Assessments in Finance and Private Sector Development: What Have We Learned and What Should We Learn?," World Bank Research Observer, World Bank Group, vol. 25(2), pages 209-233, August.
  4. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2011. "Does Management Matter? Evidence from India," NBER Working Papers 16658, National Bureau of Economic Research, Inc.
  5. Bruhn, Miriam & Karlan, Dean & Schoar, Antoinette, 2012. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," Working Papers 100, Yale University, Department of Economics.
  6. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "Business Training and Female Enterprise Start-up, Growth, and Dynamics: Experimental evidence from Sri Lanka," CAGE Online Working Paper Series 98, Competitive Advantage in the Global Economy (CAGE).
  7. Marcel Fafchamps & Simon Quinn & David McKenzie and Christopher Woodruff, 2010. "Using PDA consistency checks to increase the precision of profits and sales measurement in panels," Economics Series Working Papers CSAE WPS/2010-19, University of Oxford, Department of Economics.
  8. McKenzie, David, 2011. "How can we learn whether firm policies are working in africa ? challenges (and solutions?) for experiments and structural models," Policy Research Working Paper Series 5632, The World Bank.
  9. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
  10. McKenzie, David, 2012. "Beyond baseline and follow-up: The case for more T in experiments," Journal of Development Economics, Elsevier, vol. 99(2), pages 210-221.
  11. John Gibson & David McKenzie, 2007. "Using the Global Positioning System (GPS) in Household Surveys For Better Economics and Better Policy," Working Papers in Economics 07/04, University of Waikato, Department of Economics.
  12. Martin Valdivia & Dean Karlan, 2006. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 941, Economic Growth Center, Yale University.
  13. Nicholas Bloom & John Van Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 203-24, Winter.
  14. Kjetil Bjorvatn & Bertil Tungodden, 2009. "Teaching business in Tanzania: Evaluating participation and performance," CMI Working Papers 9, CMI (Chr. Michelsen Institute), Bergen, Norway.
  15. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2010. "What Capital Is Missing in Developing Countries?," American Economic Review, American Economic Association, vol. 100(2), pages 629-33, May.
  16. John Gibson & David McKenzie, 2007. "Using Global Positioning Systems in Household Surveys for Better Economics and Better Policy," World Bank Research Observer, World Bank Group, vol. 22(2), pages 217-241, September.
  17. Karlan, Dean & Knight, Ryan & Udry, Christopher, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Working Papers 105, Yale University, Department of Economics.
  18. Erica Field & Seema Jayachandran & Rohini Pande, 2010. "Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India," American Economic Review, American Economic Association, vol. 100(2), pages 125-29, May.
  19. Pablo Fajnzylber & William Maloney & Gabriel Montes Rojas, 2006. "Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico," World Bank Economic Review, World Bank Group, vol. 20(3), pages 389-419.
  20. repec:cge:warwcg:97 is not listed on IDEAS
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Citations

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Cited by:
  1. Sara Johansson de Silva & Pierella Paci & Josefina Posadas, 2014. "Lessons Learned and Not Yet Learned from a Multicountry Initiative on Women's Economic Empowerment," World Bank Publications, The World Bank, number 16377.
  2. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "Business training and female enterprise start-up, growth, and dynamics : experimental evidence from Sri Lanka," Policy Research Working Paper Series 6145, The World Bank.
  3. Cho, Yoon Y. & Honorati, Maddalena, 2013. "Entrepreneurship Programs in Developing Countries: A Meta Regression Analysis," IZA Discussion Papers 7333, Institute for the Study of Labor (IZA).
  4. Sonobe, Tetsushi & Otsuka, Keijiro, 2012. "The Role of Training in Fostering Cluster-Based Micro and Small Enterprises Development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Nguimkeu, Pierre, 2014. "A structural econometric analysis of the informal sector heterogeneity," Journal of Development Economics, Elsevier, vol. 107(C), pages 175-191.
  6. World Bank, 2013. "Europe 2020 Romania : Evidence-based Policies for Productivity, Employment, and Skills Enhancement," World Bank Other Operational Studies 16255, The World Bank.
  7. Jonathan Argent & Britta Augsburg & Imran Rasul, 2013. "Livestock asset transfers with and without training: evidence from Rwanda," IFS Working Papers W13/23, Institute for Fiscal Studies.
  8. Beaman, Lori & Magruder, Jeremy & Robinson, Jonathan, 2014. "Minding small change among small firms in Kenya," Journal of Development Economics, Elsevier, vol. 108(C), pages 69-86.
  9. Umidjon Abdullaev & Marcello Estevao, 2013. "Growth and Employment in the Dominican Republic," IMF Working Papers 13/40, International Monetary Fund.

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