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Infrastructure Grants and the Performance of Microenterprises

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  • Chaurey, Ritam

    (The Johns Hopkins Carey Business School)

  • Le, Duong Trung

    (World Bank)

Abstract

We evaluate the impact of a place-based infrastructure development scheme directed towards India's most "backward" districts, on the performance of microenterprises. "Backward" districts were selected based on a transparent score-based assignment mechanism. Using a Fuzzy Regression Discontinuity Design, we find that firms in treated districts had higher profits, revenues, and employment. Improvements in electrification was an important channel driving these results, as firms used more electricity and had a lower likelihood of facing a power cut. We also find increases in migrants, and proportion of new firms in treated districts, along with negative spillovers in areas closer to the treated districts.

Suggested Citation

  • Chaurey, Ritam & Le, Duong Trung, 2018. "Infrastructure Grants and the Performance of Microenterprises," IZA Discussion Papers 11749, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11749
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    More about this item

    Keywords

    infrastructure; microenterprises; place-based policy; regression discontinuity;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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