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Business Literacy and Development: Evidence From a Randomized Controlled Trial in Rural Mexico

Gabriela Calderón, Jesse Cunha and Giacomo De Giorgi ()

No 742, Working Papers from Barcelona Graduate School of Economics

Abstract: A large share of the poor in developing countries run small enterprises, often earning low incomes. This paper explores whether the poor performance of businesses can be explained by a lack of basic business skills. We randomized the offer of a free, 48-hour business skills course to female entrepreneurs in rural Mexico. We find that those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government. Indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages, are economically meaningful, yet imprecisely measured. We present a simple model of experience and learning that helps interpret our results, and consistent with the theoretical predictions, we find that "low-quality" entrepreneurs are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.

Keywords: business literacy; development; entrepreneurship (search for similar items in EconPapers)
JEL-codes: C93 I25 O12 O14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dev, nep-edu, nep-ent, nep-exp and nep-mfd
Date: 2013-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34) Track citations by RSS feed

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Working Paper: Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico (2013) Downloads
Working Paper: Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico (2013) Downloads
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