Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico

The poor in developing countries often run small enterprises, typically with low earnings, although lacking basic business skills. We offer a business skills course to female entrepreneurs in rural Mexico. We find that those randomly assigned to treatment have larger profits and revenues, serve a greater number of clients, and are more likely to use formal accounting techniques. These effects persist in the medium run. We present a simple model to interpret our results: we find that low-quality entrepreneurs appear slightly more likely to quit their business posttreatment and that the positive impacts of the treatment are increasing entrepreneurial quality.