Navigating global banking standards

Dr Emily Jones, Deputy Director, Blavatnik School of Government, Global Economic Governance Programme
Professor Ngaire Woods, Blavatnik School of Government, Global Economic Governance Programme
Professor Thorsten Beck, Cass Business School

Project webpage
Research Council UK's project page

In the wake of the global financial crisis, industrialised countries have agreed a series of regulatory reforms to repair and regulate their own financial systems.

All countries, including LICs are encouraged to adopt these new global standards. Members of the G20 have asked the Financial Stability Board, IMF and World Bank to study how global banking initiatives will impact developing and emerging economies, identifying this area as a key policy concern for promoting inclusive growth.

To date the scant research on this question addresses almost exclusively emerging market economies. LIC governments and advisers have voiced an urgent need for LIC-specific analysis.

This project will be amongst the very first to look at how political institutions and processes - at both the domestic and global levels - shape the impact of global banking initiatives on LICs and their ability to harness financial flows for inclusive growth. The core research questions are:

  1. How much de facto flexibility do LICs have in respect of the new regulatory standards, how much do they need, and under what conditions (economic and political; global, regional and national) should they adopt new regulatory standards? 
  2. What strategies for influencing global standard-setting processes and institutions are likely to yield the best outcomes for LICs?

The project combines two disciplinary approaches: political science and economics. It combines quantitative and qualitative analysis, and will generate new datasets.

The first two years of the project (2015-2016) are devoted to developing the project’s framework, conducting research and assembling findings. In the third year (2017), policy-makers will be invited to discuss the findings and their implications for global banking regulations and low-income country strategies.

c. Gates Foundation

c. Gates Foundation

Gender and pro-poor agricultural growth

Nonfarm/farm linkages and village dynamics in sub-Saharan Africa

Dr Agnes Andersson Djurfeldt, Lund University

Project webpage
Research Councils UK project page

This project considers the interaction between the farm and the non-farm sectors during processes of agricultural growth, while refining gender analysis, in Ghana, Kenya, Malawi, Mozambique, Tanzania and Zambia.

The study will assess under what social and institutional conditions pro-poor agricultural growth entrenches or redresses gender-based differences in access to agrarian resources, and what consequences this has for linkages to the non-farm sector. Broad-based agricultural growth will be examined from a gender perspective and, to situate these processes locally, against the backdrop of national agricultural policies and broader demographic, socio-economic changes.

Research will be conducted at village, household and individual levels through three key questions:

  • How can the consequences of gender-differentiated access to productive and institutional resources during processes of broad-based agricultural growth be understood?

  • How can linkages between agriculture and the non-farm sector be analysed from a gender perspective, given that non-farm income may be important in alleviating inferior access to agrarian resources among women in particular?

  • What village-level characteristics are relevant to understanding the dynamics of broad-based agricultural growth and non-farm/farm interaction from a gender perspective?

Growing as a community in rural DRC. c. Russell Watkins/DFID

Growing as a community in rural DRC. c. Russell Watkins/DFID

Financial volatility, macroprudential regulation and economic growth in Low-Income Countries

Professor Pierre-Richard Agenor, The University of Manchester

Project webpage
Project blog
Research Councils UK project page

This project studied interactions between financial volatility, macroprudential regulation, and economic growth, in the context of low-income developing countries.

The overall objective was to contribute to the economic growth progress of Sub-Saharan Africa by drawing policy lessons for the design of macroprudential rules aimed at mitigating the impact of financial volatility on economic growth. Although much of the debate has focused on the implications of financial volatility for short-term economic stability, the emphasis of the research is on the long-term effects of such volatility.

From that perspective, the global financial crisis raises some important issues;

  • How does financial volatility affect long-run growth?
  • Can macroprudential rules designed to reduce the procyclicality of financial systems be detrimental to long-run growth?
  • Is there a need to revisit the pace of domestic financial liberalisation?

These issues are particularly important for the poorest countries, given the need to maintain high growth rates to reduce poverty and promote human development.

The project aimed to tackle these issues both analytically and empirically through the construction of theoretical macroeconomic models, the application of econometric techniques, and the preparation of country case studies, with the aim of drawing broad policy lessons for the design of macroprudential rules. 

Labour outmigration, agricultural productivity and food security

Dr Dirgha Ghimire, University of Michigan

Start: Oct 2014  |  End: Sept 2017

Project webpage
Research Councils UK project page

International labour migration from poor agricultural regions to more industrialised countries is a growing concern. This study focuses on the impact of labour out-migration on agricultural productivity in the migrant-sending locale of Chitwan Valley, Nepal, a poor area persistently facing food security problems.

This project will examine:

  • the extent to which labour out-migration influences agricultural productivity, women's participation in farming and exit from farming

  • the degree to which remittances influence farm technology use, women's participation in farming, and exit from farming

  • the relationship between the use of farm technology and exit from farming, and subsequent out-migration.

The research will generate high-quality scientific outcomes that include a comprehensive panel data set with potential to address perplexing methodological problems, as well as new empirical evidence on the consequences of labour out-migration, agricultural productivity and its interplay with gender.

Farming for development in Nepal. c.  UN/Gayle Jann

Farming for development in Nepal. c.  UN/Gayle Jann

Micro-credit, financial access, and growth

c. Rachel Hinman/Flickr

c. Rachel Hinman/Flickr

Professor Timothy Besley, London School of Economics and Political Science

Start: October 2014 | End: September 2017

Research Councils UK project page

There is a well-established link between financial market development and growth rates at the aggregate level. Economists working on financial markets in developing countries have also investigated extensively how financial arrangements affect households and businesses. Particular attention has been paid to how contracting and market frictions caused by transactions costs and informational constraints may limit borrowing opportunities for the poor, and can even lead to poverty traps.

However, our understanding of the link between the micro and macro pictures remains limited. Policy makers and NGOs, particularly in the guise of micro-finance institutions (MFIs), are squarely behind the need to extend finance as a means of raising productivity and fostering institutional change, particularly to increase entrepreneurship and growth in low-income environments. However, for such strategies to flourish and to be effective, they need the tools to understand the impact of alternative strategies for extending credit.

The focus of the research is on understanding how technologies which improve credit access affect productivity and welfare. The approach will focus on how the wealth and productivity distribution among actual and potential entrepreneurs affects take-up of finance in different environments including, for example, how competition affects outcomes. It provides a vehicle for understanding the links between financial contracts on the ground and aggregate outcomes as well a means of interpreting the results from evaluation studies. The model that we propose can be calibrated to the data using a range of empirical estimates.

Productivity improvements in LIC manufacturing sectors

c. Tareq Salahuddin

c. Tareq Salahuddin

Multidimensional evidence from Bangladeshi garment factories

Dr Atonu Rabbani, Innovations for Poverty Action

Start: Jun 2014  |  End: Jun 2017

Research Councils UK project page

Manufacturing sectors in developing countries show a far greater dispersion in firm productivity and management practices than counterparts in high-income countries. Sustained increases in wages and employment creation depend on increases in productivity.

This project aims to deepen our understanding of the process of productivity improvement in manufacturing firms in low-income countries (LICs), and to gain insights as to why productivity and innovation lag.

The research will focus on the Bangladeshi Ready-made garment (RMG) sector, the largest source of urban employment in Bangladesh. The effects of a training program developed and offered by Solutions for Management International (S4Mi), a not-for-profit consulting firm established as a part of DFID's Responsible and Accountable Garment Sector (RAGS) programme will be studied. 

S4Mi and the participating factories will select a single pilot production line on which to focus and a random selection of pilot lines will provide a valid comparison group prior to the factory-wide rollout. We will also combine extremely detailed productivity analysis with innovative survey and interview data. The survey and interview data will provide a unique window onto the internal processes of change that accompany the transition. 

Assessing models of public-private partnerships for irrigation development in Africa (AMPPPIDA)

Dr Ruth Meinzen-Dick, International Food Policy Research Institute

Start: Jul 2014  |  End: Jun 2017

Project webpage
Research Councils UK project page

Public private partnerships (PPPSs) have the potential to bring much-needed financial, technical, and managerial resources to the irrigation sector in Africa south of the Sahara and are explicitly identified in the food security and irrigation strategies of Tanzania and Ghana. However, previous experience with PPPs suggests that governments and communities need significant capacity to effectively negotiate, monitor, and implement PPP irrigation projects to achieve environmentally, economically, and socially sustainable outcomes.

The project addresses the following questions:

  • What role can PPPs play in the expansion of irrigation by providing for increased innovation through the creation, transfer, and adoption of new knowledge?
  • How effective have PPPs been in irrigation?
    How do different types of PPPs create incentives for actors to participate and how have these influenced environmental, economic, and social sustainability?
  • What are the procedural and distributional impacts of PPP schemes and the ways in which men and women participate in, benefit from, or are affected by PPP institutional arrangements?

Disseminating innovative resources and technologies to smallholders (DIRTS) in Northern Region, Ghana

Professor Chris Udry, Innovations for Poverty Action

Start: Jul 2014  | End: July 2017

Project webpage
Research Councils UK project page

In Ghana’s Northern Region, smallholder farmers who cultivate rainfed crops face significant risk and achieve just a fraction of potential yields. They can face weather shocks, chronically underinvest in input technologies, maintain limited liquid savings and may be food insecure.

Innovations for Poverty Action (IPA), the International Food Policy Research Institute (IFPRI), the Savannah Agricultural Research Institute (SARI), the University of Development Studies (UDS) and the Ghana Ministry of Food and Agriculture (MoFA) will partner to examine the barriers to smallholder farmer adoption of intensified cultivation practices and risk management tools.

They will also measure the impact of three innovative, potentially scalable programmes on farm production and profitability, consumption and food security, intra-household labour allocation, asset holdings and rural household resilience.

The project will use randomised controlled trial methodology to measure the impact of providing assured rural access to:

  • improved information flows through Android-based extension applications;
  • improved-yield input technology packages at varying prices; and
  • commercial drought index insurance at varying prices.

The project will be implemented by the MoFA, and rigorously evaluated by IPA. On conclusion of the study, partners will widely disseminate evaluation results, demand curves, cost-benefit analyses, programmatic tools, policy recommendations and scale-up strategies.

c. Dr Kofi Boa/Center for No-Till Agriculture in Ghana

c. Dr Kofi Boa/Center for No-Till Agriculture in Ghana

Privatisation and productivity growth

c. ADB/Flickr

c. ADB/Flickr

Dr Amalavoyal Chari, University of Sussex

Start: Nov 2014  |  End: Oct 2017

Research Councils UK project page

This research project aims to conduct the first empirical analysis of the effects of privatisation of State Owned Enterprises (SOEs) on the allocation of productive resources in a Low-Income Country (LIC), addressing the following questions:

  •  How does privatisation impact the productivity of other private enterprises that have labour and input market linkages with the privatized SOE?
  •  How do the market and regulatory environments interact with privatisation? We will examine a number of policy features that are likely to condition the effects of privatisation, including labour legislation and trade openness.

The hypothesis is that the operation of state-owned enterprises (SOEs) may lock an economy into an inefficient allocation of resources. The research will gain an insight of when and under what conditions privatisation policy can serve as an instrument to restore allocative efficiency and improve aggregate productivity by releasing resources to more innovative sectors of the economy.

The project will utilise data from annual industry surveys, as well as data from household employment surveys, and combine these with data on privatisation in India. A comparison of changes in productivity and labour market outcomes for factories in districts that saw a reduction in the public sector due to privatization, will be made with districts that experienced no changes. This will allow the team to identify and estimate the effects of privatization.

The expected outputs of this project will include 2-3 academic papers presenting the analysis of the effects of privatisation in India. These findings will then be built upon to develop a policy paper that applies the lessons learnt to provide recommendations that can guide privatisation policy in Bangladesh. This policy paper and related policy briefs will be disseminated widely in the policy and academic community in Bangladesh.

Optimal packaging of insurance and credit for smallholder farmers in Africa (AGRICREDIT+)

Professor Ana Marr, University of Greenwich

Start: Oct 2014  |  End: Sep 2017

Project website
Research Council UK project page

Farm households in Africa must cope with a variety of challenging conditions: poor soil quality, weather, and infrastructure. With yields already low, often due to the poor soil quality, variations to growing conditions can be life threatening. Meanwhile, inadequate infrastructure makes it difficult to help the households with access to financial services, insurance and inputs that could stabilise their access to resources, and enhance yields.

Addressing just one aspect of these problems - bringing agricultural inputs to the farm for example - will not be sufficient: credit is also needed. Credit can only be provided if there is a likelihood that loans will be repaid. Here, insurance can help. If insurance of the loan makes it attractive enough for the lender, a package can be composed of inputs, with credit and insurance. However, the households will remain exposed to some risks as insuring against everything is prohibitively expensive.

This research therefore addresses this core question;

What is the appropriate degree of insurance in such bundles?

It aims to investigate how to supply inputs to farmers on credit, with insurance, in such a way that a good balance is found between the benefits and risks to the farmers, and the profits and risks to the credit provider.

The study will focus on Kenya and Zambia in collaboration with a large insurance provider and a farmers organisation. Information will be gathered on the costs, benefits and risks involved in using the inputs, the alternatives open to stakeholders, and the costs and benefits involved in providing credit to finance the purchase of inputs, with and without an insurance against crop failure.

The overall goal is to provide knowledge that can help other suppliers of insurance and credit, and farm organisations, to establish similar packages that are adapted to the local conditions for input supply, and financial services.

Microcredit and microsavings for small enterprises in Pakistan

Urban micro credit in Pakistan c. World Bank/Flickr

Urban micro credit in Pakistan c. World Bank/Flickr

Dr Simon Quinn, University of Oxford

Start: Sep 2014  |  End: Aug 2017

Research Councils UK project page

Recent research on microfinance suggests that savings products may be more useful for poor communities than loan products. 

Motivated by this research, the project aims to address two main questions:

  1. How do ROSCA-like (Rotating Savings and Credit Associations) products compare to standard loan contracts for microenterprises?
  2. Can banks overcome contract enforcement problems in offering ROSCA-like financial products?

To understand how savings products can be improved for the poor, we need to understand several important issues;

  • Why the poor do not save more?
  • How does household behaviour change when the household is a debtor, rather than a creditor?
  • Can better microfinance products be developed to facilitate saving?

The research will use Randomised Controlled Trials on assigned microenterprises, using a 'cluster-randomised' design, treating in some locations but not in others. In treated locations, firms will be assigned to different positions in a rotating credit structure and interest rates will be varied. A baseline and three follow-up surveys of the targeted microenterprises will be conducted at three-month intervals in control and treated locations, to form a four-wave panel. High frequency data using short phone surveys will be collected, and we will augment this sample with data generated by the bank internally.

We anticipate that the research results will have direct relevance to both policymakers and microfinance providers. If our product proves viable, it could provide small enterprises with a mechanism to increase investment and employment - and, in turn, to drive growth.

Integrated assessment of the determinants of the maize yield gap in Sub-Saharan Africa

Towards farm innovation and enabling policies

Professor Martin Van Ittersum, Wageningen University

Start: Jan 2015  |   End: Jan 2018

Project webpage
Research Councils UK project page

This project aims to identify the key bio-physical and farm and crop management factors that determine the maize yield gap in Sub-Saharan Africa (SSA) and how these are related to existing institutional, infrastructural, socio-economic and policy constraints.

The research focuses on the major food crop in SSA, maize, mainly produced by small scale farmers. Maize is consumed in almost all Sub-Saharan African countries, accounting for 30-50% of low-income household expenditure. Addressing yield performance in maize is therefore valuable from both a food security and poverty perspective.

The project will focus on Ghana and Ethiopia as maize-growing case study countries where we can build on existing data and local partnerships. Enhanced understanding for these two countries from West and East Africa should have wider meaning.

The main research questions are:

  1. What is a scientifically sound and applicable generic framework linking agronomic, socio-economic, institutional, infrastructural and policy factors, explaining maize yield gaps in SSA?
  2. What are the main biophysical and farm and crop management factors that help to explain yield gaps in the case study countries?
  3. What are the main infrastructural, institutional, socio-economic and policy factors that explain farm and crop management and consequently yield gaps?
  4. Which policies and farm management options are key for increasing yield performance in SSA?

Heterogeneous quality of agricultural commercial inputs and learning through experimentation

Soya beans, Kenya c. STARS/Kristian Buus (FLICKR)

Soya beans, Kenya c. STARS/Kristian Buus (FLICKR)

Associate Professor Karen Macours, Paris School of Economics

Start: Jul 2014  |  End: Jun 2017

Research Councils UK project page

This project aims to contribute to a better understanding of how agricultural productivity of smallholder farmers in Sub-Saharan Africa can be raised through: a) better access to information and regulation of input quality and b) adjustments in agricultural innovation process that account for context and behavioural constraints.

Three research questions will be studied:

  • Is the heterogeneous and hidden quality of inputs a barrier to technology adoption? If so, would the best solution be: recommendation of interventions that guide the farmers toward the right inputs; regulation; or diffusion of information? 
  • Do estimates regarding returns to new technologies provide biased estimates for the response to inputs in real life conditions? If so, what are the most important sources of such bias, and how can trials be designed to avoid them?
  • Does learning-by-doing and learning-from-others regarding new agricultural technologies differ depending on soils, skills and gender? And does this heterogeneity provide useful lessons for the design of more inclusive extension models, and on the role of own experimentation in such models?

Two Randomised Controlled Trials (RCT) will be conducted in order to collect several rounds of panel data for the study of dynamic adoption processes. This will be complemented by information from soil samples and by detailed information on farmers’ cognitive, non-cognitive and technical skills.

Worker sorting, work discipline and development

c. NYU Stern BHR/Flickr

c. NYU Stern BHR/Flickr

Sharon Buteau, Institute for Financial Management and Research

Start: Sep 2014  |  End: Jul 2017

Project webpage
Research Councils UK project page

This project aims to better understand why large formal firms are typically more productive than small informal firms. The methodology allows the productivity-enhancing role of the discipline and management systems in place in large-scale formal work environments to be separated from the selection of high effort and high ability employees into these stricter work environments.

This experiment consists of randomising workers into different work settings to eliminate the selection bias. In addition to the office versus home treatment and control groups seen in other studies, another randomly selected group of workers will choose their work setting of preference. Comparing the first two groups, the project can evaluate, independent of characteristics, whether office-based work induces higher levels of worker productivity and/or faster increases in worker productivity.

We expect the long-term beneficiaries of the research outcome to be the underemployed, low skilled population, including a significant number of women. It is this group who could potentially increase their livelihoods if policymakers could design better industrial policies to generate a larger number of employment opportunities for this group. In addition, by understanding better the characteristics of employees and their productivity, this research aims to aid human resources and management decisions at the firm-level and better tailor jobs to specific segments of the population.

Studying African Farmer-led Irrigation (SAFI)

Professor Philip Woodhouse, The University of Manchester

Start date: Jan 2015 | End date: Dec 2017

Project website
Research Council's UK project page
Project Twitter

International commitment to funding irrigation in Africa is increasing in response to rising food prices and the ongoing challenge of low agricultural productivity in sub-Saharan Africa. An alliance of five influential international organisations has called for large-scale new investments into irrigation (The World Bank, African Development Bank, Food and Agricultural Organization, International Fund for Agricultural Development and International Water Management Institute).

Though formal investment in large-scale irrigation measures has declined, there has been widespread investment by African farmers themselves in diverse ‘informal’ irrigation methods including stream diversion, wetland reclamation, and the implementation of small pump systems. 

To date there have been no systematic studies of whether these measures increase productivity or benefit the wider economy. Current framings of, and writings on, irrigation in sub-Saharan Africa are constrained by two limitations linked to conceptions of irrigation that originate outside the region. First, irrigation in Africa is commonly characterised as falling short of an Asian benchmark. Second, the solution is often envisaged as the ‘transfer of technology’ from elsewhere. 

The DEGRP-funded Studying African Farmer-led Irrigation (SAFI) project aims to remedy these issues, bringing together researchers and irrigation specialists from the UK, France, Netherlands, and Africa to explore whether current investment by farmers in small-scale irrigation can offer a model for broad-based economic growth in rural areas of Africa.

Through a detailed analysis of existing initiatives, the project aims to arrive at a greater understanding of the socio-economic consequences of small-scale investment; changing land and water rights; and of the choices of technical and financial support required for small-scale farmers to increase agricultural productivity. This understanding will then be used to help inform policies for enhanced agricultural productivity.

The research will focus on the following questions: 

  • In what different ways do development agencies (Government and non-Government) engage with farmer-led irrigation initiatives?
  • How do different policy-making priorities and assumptions shape this engagement in the interconnected political domains of irrigation development, community development, agricultural development and natural resources management?
  • To what extent are development agencies' policies modified as a result of engagement with farmers involved in irrigation development?
  • How do different groups of farmers engage in farmer-led irrigation, and with what outcomes for their assets and ability to derive benefits from agriculture?
  • Based on the findings of the research, can a typology of irrigation initiatives be identified that would be useful for policy makers?
  • What is the wider country-level significance of farmer-led irrigation initiatives?

Longterm Livelihood Change in Tanzania

Professor Daniel Brockington, The University of Manchester

Start: Jan 2015  |  End: Oct 2015

Project website
Research Councils UK project page

Many African economies are growing rapidly and there are signs of prosperity in rural and urban regions. Cheaper technology (mobile phones, motorbikes and improved seed varieties) are reaching all but the remotest parts of many countries.

However it is not always clear how inclusive and pro-poor this growth is. It is all too easy for the benefits of improved agricultural production, for example, to be concentrated on relatively few wealthy farmers and even to be instrumental in creating rural deprivation and landlessness. 

In the absence of viable alternatives to agriculture, those without land become a rural proletariat with no long term prospects or prosperity. In this context, the key issue is what assets the rural poor can build up during periods of national economic growth. 

This project will make use of unusually good records of survey data in Tanzania to provide the insights of qualitative data across a sufficiently large area and contribute constructively to the findings of quantitative panel data. A number of communities in different parts of Tanzania - from whom data on household assets were collected in the 1990s - will be revisited. Assets will be surveyed and then explored through a detailed qualitative interview. This data will provide a rich and detailed picture into the village-, household-, and sub-household-level dynamics of poverty and poverty reduction. 
 

 

 

 

 

Inside the production function: The effect of financial contracts on growing firms' technology use

c. Adam Cohn/FLICKR

c. Adam Cohn/FLICKR

Evidence from a field experiment in Uganda

Dr Andreas Madestam, Stockholm University

Start: Sep 2014  |  End: Sep 2017

Project webpage
Research Councils UK project page

It is widely accepted that access to credit is an important engine for growth. Credit rationing is also believed to be a common feature of developing credit markets, because of weak legal institutions and a lack of collateral.

This project will examine how key aspects of the most frequent form of financing, debt, constrain the expansion of young and newly established firms using a randomised field experiment.

Starting a business entails learning and uncertainty, implying that project returns tend to be back loaded or uncertain. Moreover, indivisible start-up costs usually require large initial investments. Features of the standard debt contract, such as a constant repayment stream and caps on the initial loan size, may distort investment toward the use of inputs that involve less learning, less uncertainty, and smaller project size.

In cooperation with BRAC Uganda and their Small Enterprise Lending Program, we will provide experimental evidence on the effect of credit contract terms on starting and newly established firms’ use of inputs, profits, and repayment performance. In particular, we want to understand whether the contractual terms are particularly restrictive for firms with back loaded or uncertain project returns and large fixed costs.

Agricultural misallocation, occupational choice and aggregate productivity

The role of insecure land rights and missing financial markets

Dr Jan Grobovsek, University of Edinburgh

Start: Sep 2014  |  End: Aug 2017

Research Councils UK project page

Compared to advanced economies, most of the Least Developed Countries feature extremely low agricultural labour productivity, while productivity in non-agriculture is only modestly low.

This low agricultural productivity can be partly explained by misallocation of production factors, in particular of land across farms - e.g. some farms use too much land and others too little. When comparing incomes of workers in agriculture and non-agriculture, it is difficult to understand why so many workers remain in agriculture, indicating misallocation across occupations.

This research project will first identify causes of this misallocation. Second, we intend to understand how policies that diminish misallocation could change agricultural, non-agricultural and, ultimately, aggregate productivity i.e. by how much could they potentially increase GDP.

We are also interested in the welfare effects of such policies on individuals with distinct characteristics (by skill, wealth, gender, age, occupation, etc.). Who stands to gain and who may lose?

Conducting research in Ethiopia and Uganda -  countries which are both categorised by a high fraction of land subject to insecure tenure and underdeveloped financial markets - we will collect data via a social survey.

Research will use structural general equilibrium model economies for analysis. In such models, decisions of distinct individuals and the formation of prices are all interdependent. This is crucial, because our proposed policy changes may alter the decisions of many individuals, which in turn affects relative prices and creates even more economic shifts. Our approach takes into account such feedback effects and is hence an ideal tool to understand what would happen if policies were to change.

Konso tribal land, Ethiopia c. Rod Waddington/Flickr

Konso tribal land, Ethiopia c. Rod Waddington/Flickr

Complementing managerial capital with business information

A field experiment on international consulting for entrepreneurs in Uganda and Rwanda

Kampala, Uganda. c. Weesam2010

Kampala, Uganda. c. Weesam2010

Professor N Vilcassim, London Business School

Start: Oct 2014  |  End: Oct 2017

Research Councils UK project page

This research project seeks to address a significant constraint to growth among businesses in developing countries: managerial capital.

Managerial capital refers to the capabilities and confidence associated with managing cash, customers, competition, capital and constraints within businesses (cf. Bruhn, Karlan and Schoar 2012). Improvements in managerial capital offer the possibility of improved growth and prosperity. However, there exists substantial evidence that it is not abundant among micro and small businesses.

In this research, we examine how managerial capital might help entrepreneurs in developing countries to transform their businesses: from micro-to small-sized enterprises and from small-to medium-sized enterprises. Despite the importance of this transformation for economic growth, few researchers so far have examined this phenomenon empirically.

The research seeks to address the limitations of prior work, by implementing a randomised-controlled trial (RCT) that focuses on a more homogeneous group of firms, uses a more intense intervention, provides consulting programs that focus on only one dimension of managerial capital per project, and improves access to business information.