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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

    () (Binghamton University, New York)

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 for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11749
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    References listed on IDEAS

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    1. David McKenzie, 2017. "Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition," American Economic Review, American Economic Association, vol. 107(8), pages 2278-2307, August.
    2. Mayer, Thierry & Mayneris, Florian & Py, Loriane, 2012. "The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs," CEPR Discussion Papers 9074, C.E.P.R. Discussion Papers.
    3. Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," CEPR Discussion Papers 7396, C.E.P.R. Discussion Papers.
    4. Molly Lipscomb & A. Mushfiq Mobarak & Tania Barham, 2013. "Development Effects of Electrification: Evidence from the Topographic Placement of Hydropower Plants in Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 200-231, April.
    5. Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," Center Discussion Papers 52600, Yale University, Economic Growth Center.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    infrastructure; microenterprises; place-based policy; regression discontinuity;

    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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