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

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

Abstract

A large share of the poor in developing countries run small enterprises, often earning low incomes. This paper explores whether the poor performance of businesses 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. Indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages, are economically meaningful, yet imprecisely measured. We present a simple model of experience and learning that helps interpret our results, and consistent with the theoretical predictions, we find that "low-quality" entrepreneurs 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 742, Barcelona School of Economics.
  • Handle: RePEc:bge:wpaper:742
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    References listed on IDEAS

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    More about this item

    Keywords

    business literacy; development; entrepreneurship;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • 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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