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Constraints to the Growth of Small Firms in Northern Myanmar

  • Bah, El-hadj M.
  • Cooper, Geoff

This paper uses survey data collected from Kalaymyo, a small urban city in North West Myanmar, to characterize firms and analyze the constraints limiting their growth. The level of firm ownership is very high but most firms are small, informal, operated out of the home, earning low income and with no employees. The most binding constraints are related to financing constraints, especially lack of access to informal credit. This is followed by the high degree of competition as the majority of firms are small retailers selling non-differentiated goods. This lack of credit combined with an apparent aversion to debt, limits the ability of entrepreneurs to take advantage of the high returns available on investment. We find that firms that made a capital investment over the last three years are significantly more profitable than those that did not.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39819.

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Date of creation: Jun 2012
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Handle: RePEc:pra:mprapa:39819
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  1. Christopher Udry & Santosh Anagol, 2006. "The Return to Capital in Ghana," American Economic Review, American Economic Association, vol. 96(2), pages 388-393, May.
  2. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
  3. Geeta Batra & Daniel Kaufmann & Andrew H. W. Stone, 2004. "The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development," Microeconomics 0405004, EconWPA.
  4. Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
  5. Tidiane KINDA, 2010. "Increasing Private Capital Flows To Developing Countries: The Role Of Physical And Financial Infrastructure In 58 Countries, 1970-2003," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
  6. Raghuram G. Rajan & Luigi Zingales, 1996. "Financial Dependence and Growth," NBER Working Papers 5758, National Bureau of Economic Research, Inc.
  7. Inessa Love & Nataliya Mylenko, 2003. "Credit reporting and financing constraints," Policy Research Working Paper Series 3142, The World Bank.
  8. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2008. "How Important Are Financing Constraints? The Role of Finance in the Business Environment," World Bank Economic Review, World Bank Group, vol. 22(3), pages 483-516, November.
  9. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
  10. Hausmann, Ricardo & Klinger, Bailey, 2008. "Growth Diagnostics in Peru," Working Paper Series rwp08-62, Harvard University, John F. Kennedy School of Government.
  11. Christopher Udry & Santosh Anagol, 2006. "The Return to Capital in Ghana," Working Papers 932, Economic Growth Center, Yale University.
  12. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
  13. Stern, Nicholas, 1991. "The Determinants of Growth," Economic Journal, Royal Economic Society, vol. 101(404), pages 122-33, January.
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