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

Author

Listed:
  • Gabriela Calderón
  • Jesse M.Cunha
  • Giacomo De Giorgi

Abstract

This paper explores whether the poor performance of many micro-enterprises can be explained by a lack of basic business skills. We randomized the offer of a free, 48-hour business skills course to female entrepreneurs in rural Mexico. We find that those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government. Economically significant indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages are observed. We present a simple model that helps interpret our results, and consistent with the theoretical predictions, we find that entrepreneurs with lower baseline profits are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.

Suggested Citation

  • Gabriela Calderón & Jesse M.Cunha & Giacomo De Giorgi, 2013. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Working Papers 2013-24, Banco de México.
  • Handle: RePEc:bdm:wpaper:2013-24
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    References listed on IDEAS

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    More about this item

    Keywords

    Business literacy; economic development; micro-enterprise;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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