The missing middle in developing countries revisited

Kunal Dasgupta

Indian Growth and Development Review, 2016, vol. 9, issue 1, 32-52

Abstract: Purpose - The purpose of this paper is to develop a dynamic model to understand the evolution of the firm size distribution in developing countries. Design/methodology/approach - Evidence points to the existence of a “missing middle” in the size distribution of firms in developing countries. In the model presented in this paper, the bimodality arises because of agents optimally selecting into a traditional and a modern sector. The key parameter in this model is the mean level of knowledge in the economy. Findings - For a low mean, the two sectors co-exist. As the mean rises, the size distribution converges from a bimodal to an unimodal distribution. Originality/value - Unlike existing explanations, this model does not rely on frictions to generate the bimodality in size distribution.

Keywords: Growth and development strategies; Human capital (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:igdrpp:v:9:y:2016:i:1:p:32-52

DOI: 10.1108/IGDR-11-2015-0048

Access Statistics for this article

Indian Growth and Development Review is currently edited by Professor Chetan Ghate, Professor Prabal Chowdhury and Professor Prabal Chowdhury

More articles in Indian Growth and Development Review from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().