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Firm-to-Firm Access and Private Sector Development

Author

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  • Szeidl, Adam

Abstract

Firms in developing countries often stay small and fail to upgrade. A possible explanation is barriers to accessing suppliers and clients in the production network. I present an industry equilibrium model of improving firm-to-firm access, and use this model to review and organize the existing evidence. The model makes four predictions, all of which are consistent with evidence. (1) Improving access improves business performance. (2) Improving access can both expand and reallocate the production network. The former is associated with positive indirect effects, the latter with negative indirect effects. (3) Accounting for these indirect effects, access can generate large aggregate gains. (4) A range of frictions, both external and internal to the firm, imply that private markets often under-provide firm-to-firm access. I conclude by discussing open questions.

Suggested Citation

  • Szeidl, Adam, 2025. "Firm-to-Firm Access and Private Sector Development," CEPR Discussion Papers 20755, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20755
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    File URL: https://cepr.org/publications/DP20755
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    More about this item

    JEL classification:

    • 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
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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