Firm-to-Firm Access and Private Sector Development

Adam Szeidl

No 20755, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Firms in developing countries often stay small and fail to upgrade. A possible explanation is barriers to accessing suppliers and clients in the production network. I present an industry equilibrium model of improving firm-to-firm access, and use this model to review and organize the existing evidence. The model makes four predictions, all of which are consistent with evidence. (1) Improving access improves business performance. (2) Improving access can both expand and reallocate the production network. The former is associated with positive indirect effects, the latter with negative indirect effects. (3) Accounting for these indirect effects, access can generate large aggregate gains. (4) A range of frictions, both external and internal to the firm, imply that private markets often under-provide firm-to-firm access. I conclude by discussing open questions.

JEL-codes: L14 L23 O12 O14 O33 (search for similar items in EconPapers)
Date: 2025-10
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