Informational Barriers to Market Access: Experimental Evidence from Liberian Firms

Jonas Hjort, Golvine de Rochambeau and Vinayak Iyer

No 15219, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Evidence suggests that many firms in lower-income countries stagnate because they cannot access growth-conducive markets. We hypothesize that overlooked informational barriers distort market access, excluding productive but ``information-poor'' suppliers. To investigate, we gave a random subset of medium-sized Liberian firms vouchers for a week-long program targeting equal-opportunity access to the input purchases of government, companies, and other organizations---a market that makes up upwards of 80 percent of global GDP. The program exclusively teaches ``sellership'': how to navigate large buyers' complex, formal sourcing procedures. Firms that participate win three times as many formal contracts a year later. The impact is heterogeneous: informational sales barriers bind for about a quarter of Liberian firms. Three years post-training, these firms continue to win desirable contracts, are more likely to operate, and employ more workers. We use a simple model of managers' time-constraints to illustrate a possible explanation for why informational market access barriers can persist and generate poverty-trap-like dynamics among firms, even absent credit constraints. Our results help rationalize common demand-side policies in public procurement that nonetheless appear to scratch at the surface of a bigger distortion.

JEL-codes: D2 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-ict
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Citations: View citations in EconPapers (9)

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Working Paper: Informational Barriers to Market Access: Experimental Evidence from Liberian Firms (2020)
Working Paper: Informational Barriers to Market Access: Experimental Evidence from Liberian Firms (2020)
Working Paper: Informational Barriers to Market Access: Experimental Evidence from Liberian Firms (2020)
Working Paper: Informational Barriers to Market Access: Experimental Evidence from Liberian Firms (2020)
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