How Can We Learn Whether Firm Policies Are Working in Africa? Challenges (and Solutions?) for Experiments and Structural Models
Firm productivity is low in African countries, prompting governments to try a number of active policies to improve it. Yet despite the millions of dollars spent on these policies, we are far from a situation where we know whether many of them are y...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110412081305 http://hdl.handle.net/10986/3398 |
| Summary: | Firm productivity is low in African
countries, prompting governments to try a number of active
policies to improve it. Yet despite the millions of dollars
spent on these policies, we are far from a situation where
we know whether many of them are yielding the desired
payoffs. This paper establishes some basic facts about the
number and heterogeneity of firms in different sub-Saharan
African countries and discusses their implications for
experimental and structural approaches towards trying to
estimate firm policy impacts. It shows that the typical firm
program such as a matching grant scheme or business training
program involves only 100 to 300 firms, which are often very
heterogeneous in terms of employment and sales levels. As a
result, standard experimental designs will lack any power to
detect reasonable sized treatment impacts, while structural
models which assume common production technologies and few
missing markets will be ill-suited to capture the key
constraints firms face. Nevertheless, the author suggests a
way forward which involves focusing on a more homogeneous
sub-sample of firms and collecting a lot more data on them
than is typically collected. |
|---|