a subsector approach to small enterprise promotion and research abstract this paper introduces a diagnostic research methodology designed to help target small enterprise development efforts in less developed countries it argues that research should focus on commodity specific subsectors which include the competing channels and supporting input and output linkages of small firms using this approach analysts can improve their understanding of small enterprise dynamics interventions that may promote them at low cost and policies that constrain small firm growth

giving in to social pressure in light of recent evidence we develop a theory of charitable giving in which donors feel social pressure from a direct solicitation we show that equilibrium donations are concentrated around a social norm donors below the norm increase giving while those above the norm reduce it despite a higher level of the public good relatively poor and or low altruism givers fare worse under social pressure and would avoid the solicitor at a cost aggregate donor welfare improves to the extent that the added social motive alleviates the underprovision of the public good however overprovision may result our theory therefore predicts a light handed regulation for charitable solicitations which is consistent with their exemption from the popular do not call list in the u s we further show that contrary to pure altruism a more equal income distribution may produce more of the public good in fundraising campaigns where a social norm is not apparent one may emerge endogenously if donors are not too heterogeneous in fact multiple social norms may form which offers a focal point argument for suggested donations

benefits of a registration policy for microenterprise performance in india this paper evaluates the effects of a voluntary registration policy with government authorities on financial performance of urban microenterprises in the indian manufacturing sector using data from the 2006 world bank survey of indian microenterprises and applying the semi parametric propensity score matching technique we find that being registered leads to significant gains in sales per employee and value added per employee large gains are also noted for male owned firms those operating with or without paid labor and those operating outside of the owner s home

growth of firms in developing countries evidence from cote d ivoire the paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in african countries firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources complementing the model with data on growth obstacles as perceived by the owners of firms medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services

employment dynamics in the rural nonfarm sector in ethiopia do the poor have time on their side abstract we study rural employment transitions in ethiopia between farming and both low and high return nonfarm employment we find that initial asset holdings and access to saving and credit are important factors for transition into high return rural nonfarm employment and that households participation in high return rural nonfarm activities is robust to their experience of health shocks however shocks that affect their wealth or liquidity may trigger descents into low return nonfarm employment on the other hand shocks that reduce agricultural income motivate transitions into high return rural nonfarm employment

whose business is it anyway this article examines how gender may account for productivity gaps across enterprises first using data from six countries in sub saharan africa the article demonstrates that the extent and significance of any productivity gap by gender depends critically on the criteria used to classify an enterprise using a definition of female participation in ownership there are few differences in average performance measures however a 12 productivity gap emerges when a tighter definition based on decision making control is used second the article examines which entrepreneurial characteristics education management skills experience and the motivation for being an entrepreneur are most associated with higher productivity the findings reveal that there are some gender gaps in the prevalence of these characteristics but that these do not account for the overall gender productivity gap rather while women benefit as much as men from education and management skills there are non linear impacts by gender in the benefits of having a family background in entrepreneurship sons rather than daughters benefit from having a father that was an entrepreneur or from joining a family enterprise

excusing selfishness in charitable giving the role of risk decisions involving charitable giving often occur under the shadow of risk a common finding is that potential donors give less when there is greater risk that their donation will have less impact while this behaviour could be fully rationalized by standard economic models this article shows that an additional mechanism is relevant the use of risk as an excuse not to give in a laboratory study participants evaluate risky payoffs for themselves and risky payoffs for a charity when their decisions do not involve tradeoffs between money for themselves and the charity they respond very similarly to self risk and charity risk by contrast when their decisions force tradeoffs between money for themselves and the charity participants act more averse to charity risk and less averse to self risk these altered responses to risk bias participants towards choosing payoffs for themselves more often consistent with excuse driven responses to risk additional results support the existence of excuse driven types

impure altruism and impure selfishness altruism refers to a willingness to benefit others even at one s own expense in contrast selfishness refers to prioritizing one s own interests with no consideration for others however even if an agent is selfish he might nevertheless act as if he were altruistic out of selfish concerns triggered when his action is observed that is he might seek to feel pride in acting altruistically and to avoid the shame of acting selfishly we call such behavior impurely altruistic alternatively even if an agent is altruistic he might nevertheless give in to the temptation to act selfishly we call such behavior impurely selfish this paper axiomatizes a model that distinguishes altruism from impure altruism and selfishness from impure selfishness in the model unique real numbers separately capture altruism and the other forces of pride shame and the temptation to act selfishly we show that the model can describe recent experiments on dictator games with an exit option in addition we describe an empirical puzzle that government spending only partially crowds out consumers donations contrary to the prediction based on standard consumer theory

the small the young and the productive determinants of manufacturing firm growth in ethiopia abstract this study examines the relationships between firm growth and firm size age and labor productivity using annual census based panel data on ethiopian manufacturing firms the study explicitly addresses the ongoing statistical concerns in firm growth models such as sample censoring regression to the mean and unobserved heterogeneity our empirical results indicate that firm growth decreases with size smaller firms have faster rates of growth than larger firms even after compensating for their higher attrition rates the negative relation between age and growth predicted by the learning model is found to apply only to younger firms labor productivity affects firm growth positively which indicates that there is a market selection process at work during the period of economic reforms in ethiopia

one chance in a million altruism and the bone marrow registry stem cell transplants save lives of many patients with blood diseases donation is painful but rarely has lasting adverse effects patients can accept transplants only from donors with compatible immune systems those lacking a sibling match must seek donations from the general population the probability that two unrelated persons are compatible is less than 1 10 000 health authorities maintain a registry of several million genetically tested potential donors who agree to donate if asked we find that the benefits of adding registrants of every race exceed costs we also explore the peculiar structure of voluntary public good provision that faces potential donors jel d64 h41 i11 aq 1

grassroots based rural development strategies ecuador in comparative perspective abstract international donors are providing increasing amounts of assistance to grassroots based economic initiatives in latin america and elsewhere the question is can such initiatives prosper and generate widespread improvements in living standards in the context of the prevailing neoliberal economic policy agenda the paper responds to this question from comparative latin american and east asian perspectives by analyzing how economic diversification and improved living standards were achieved in two rural parishes in highland ecuador we find that in both cases access to landownership and other assets was a critical factor in permitting small scale producers to participate in market exchange in a manner that allowed them to improve their living standards hence to the extent that neoliberal policies freeze into place the highly inequitable overall structure of asset and income distribution in ecuador and elsewhere such policies inhibit the widespread replication of the two successful cases

high growth entrepreneurial firms in africa a quantile regression approach this article analyses the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of 11 sub saharan african countries the focus of the article is on identifying those entrepreneurs attributes and firm characteristics that tend to generate a significant number of high growth firms in these countries to this end we use a quantile regression which provides a more complete estimation of the growth distribution of firms conditional on different attributes the results indicate that firms that engage in product innovation have their own transport means and are connected to the internet through their own website are especially characterized by higher growth rates and also display a distribution of growth rates skewed to the right hosting a higher number of high growth firms the effect of the last two variables which relate to distance bridging modes of infrastructure points to the self reinforcing growth effects they generate in creating wider input and output markets education raises growth opportunities by affecting the lower quantiles but it does not appear to influence the upper quantiles the estimated conditional growth distributions for the technology intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries indicating the more risky nature of doing business in these industries

does willful ignorance deflect punishment an experimental study abstract this paper studies whether people can avoid punishment by remaining willfully ignorant about possible negative consequences of their actions for others we employ a laboratory experiment using modified dictator games in which a dictator can remain willfully ignorant about the payoff consequences of his decision for a receiver a third party can punish the dictator after observing the dictator s decision and the resulting payoffs on the one hand willfully ignorant dictators are punished less if their actions lead to unfair outcomes than dictators who reveal the consequences before implementing the same outcome on the other hand willfully ignorant dictators are punished more than revealing dictators if their actions lead to fair outcomes we conclude that willful ignorance can circumvent blame when unfair outcomes result but that the act of remaining willfully ignorant is itself punished regardless of the outcome models of procedural fairness combining ex ante and ex post fairness qualitatively predict the observed punishment pattern

strategic ignorance and the robustness of social preferences participants in dictator games frequently avoid learning whether their choice to maximize their own earnings will help or hurt the recipient and then choose selfishly exploiting the moral wiggle room provided by their ignorance however this is found in an environment in which the dictator must actively learn the true payoffs so inaction means ignorance does this effect persist when one must actively choose either to be ignorant or to be informed or when one must actively choose to remain ignorant in fact whereas 45 of dictators remain ignorant when one must click to become informed this drops to 25 when one must click in either case and to 3 when one must click to remain ignorant although the exploitation of moral wiggle room is not merely an artifact it is much like social behavior itself subject to environmental and psychological factors that may reinforce or undermine its impact data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1989 this paper was accepted by uri gneezy behavioral economics

the place of home based enterprises in the informal sector evidence from cochabamba new delhi surabaya and pretoria home based enterprises hbes are an accepted component in the informal sector in rapidly developing cities however they have generally received quite a bad press especially through a concentration on the exploitation evident in piece rate homework from our work in low income neighbourhoods in cochabamba bolivia new delhi india surabaya indonesia and pretoria south africa we assess hbes with respect to the characteristics of the informal sector put forward in the literature we examine our samples of hbes against such characteristics as small scale low operator incomes informal labour relations and non separation of production and consumption we find that they largely conform to expectations incomes are low but they are very significant in poverty alleviation though many hbes require few skills a few compete effectively in international markets

the dynamics of micro and small enterprises in developing countries abstract the number of people engaged in micro and small enterprises increases as a result of new enterprises being started and through an expansion of existing activities as a partial offset to these increases employment declines when existing businesses cease operations this article draws on recent survey work to examine the magnitude and determinants of enterprise births closures and expansions it explores the ways in which these different sources of change are influenced by the state of the macroeconomy and examines policy and project implications

the behavioural economics of climate change this paper attempts to bring some central insights from behavioural economics into the economics of climate change in particular it discusses i implications of prospect theory the equity premium puzzle and time inconsistent preferences in the choice of discount rate used in climate change cost assessments and ii the implications of various kinds of social preferences for the outcome of climate negotiations several reasons are presented for why it appears advisable to choose a substantially lower social discount rate than the average return on investments it also seems likely that taking social preferences into account increases the possibilities of obtaining international agreements compared to the standard model however there are also effects going in the opposite direction and the importance of sanctions is emphasized

environmental compliance and economic and environmental performance evidence from handicrafts small businesses in mexico this research aims to fill a major gap in the relevant literature on small businesses in developing countries specifically concerning the development of models to better explain economic and environmental performance as a result of environmental compliance thus moving toward an explanation of the sustainable behavior of these businesses data from 186 pottery craft businesses located in three mexican states oaxaca puebla and tlaxcala reveal that environmental compliance significantly influences economic and environmental performance with the mediating role of environmental innovation confirming the porter hypothesis in the context of small businesses in an emerging economy environmental compliance is an important factor in improving the economic and environmental performance of small businesses in emerging economies

high rural population density africa what are the growth requirements and who participates abstract a large and increasing proportion of agricultural growth in africa must come from continuous gains in land productivity in areas of high population density and hence with already relatively high yields what that requires is analogous to the green revolution in asia several features differentiate the african situation those include greater diversity in cropping pattern including a historically larger and more widespread tropical commodity export sector the physical infrastructure in rural africa is far inferior to that of most asian countries while the greater diversity of agriculture calls for a larger and more diverse institutional structure the reality is that the research systems the ancillary education systems to spread innovation and the rural financial systems are generally greatly inferior to those of asia at the beginning of the green revolution ethiopia s record of a steady six to seven percent growth for agriculture and nearly halving of rural poverty demonstrates that with the right policies and investments a very poor country starting with poor physical and institutional infrastructure can bring a major contribution from agriculture growth to increased gdp and reduced poverty as in asia the bulk of accelerated agricultural growth will come from small commercial farmers they have sufficient farm income to reach or exceed the poverty level those are farms with depending on the country as little as 0 75 hectares to a few tens of hectares of land they comprise up to half the rural population and produce on the order of 70 80 percent of agricultural output they are in general not poor the poor have inadequate land to reach the poverty level initially with much underemployment and with substantial non farm employment the primary driver of poverty reduction is the small commercial farmer spending on the order of half of increased income on nontradable employment intensive goods and services from the rural non farm sector

the gas deregulation process in europe economic and political approach this paper analyses the efforts to deregulate the market to remove the monopolies and introduce competition both at the european union level european commission and national levels the first part of the paper describes the present situation with an emphasis on the institutional disparities among the european countries it presents the outlines of the gas directive recently adopted by the european commission the second part analyzes the perspectives of such deregulation for europe particular attention is given to the strategies implemented by the oil companies on the market the third part of the paper insists on the pending questions the transposition of the gas directive into the national laws of the european countries gives rise to several questions which have yet to be answered

inside informality the links between poverty microenterprises and living conditions in nairobi s slums summary using households rather than enterprises as the analytical unit this study of 1 755 households in nairobi s slums reveals that informal household microenterprises are indeed helping offset poverty microenterprises are helping households that are a priori more likely to be poor better microenterprise performance is associated with certain business related factors such as sales area time in and sector of operation but living conditions residential tenure and infrastructure access also strongly influence both creation and success of microenterprises interventions that improve infrastructure and reduce tenure insecurity and rent induced pressures to move may be crucial for incubating microenterprises and reinforcing their contribution to poverty alleviation in nairobi s slums

the economics of repeated extortion we provide a simple model of repeated extortion in particular we ask whether corrupt government officials opportunism to demand more once entrepreneurs have made sunk investments entails further distortion in resource allocations if the choice of technology is left to the entrepreneurs the dynamic path of demand schedules will induce entrepreneurs to pursue a fly by night strategy by adopting a technology with an inefficiently low sunk cost component the unique equilibrium is characterized by a mixed strategy of the government official in future demand our model thus explains why arbitrariness is such a central feature of extortion we also investigate implications of the stability of corrupt regimes for dynamic extortion and discuss alternative applications for our framework

the hazards of small firms in southern africa small enterprises are a ubiquitous feature of the economies of many developing countries this study is the first to examine the duration of their survival using economic theory and modern econometric techniques using data sets from surveys conducted in four southern african countries i estimate a proportional hazards model describing the closure rates of a sample of approximately 21 000 firms there is an inverse relationship between enterprise growth rates and the closure hazard the sector where it operates influences the hazard as does its location in some countries female headed firms are at a survival disadvantage compared to their male counterparts

the effects of risk and shocks on non farm enterprise development in rural ethiopia summary this paper assesses the impact of risk and shocks on non farm enterprise development in rural ethiopia using a matched household enterprise community dataset augmented with precipitation based measures of risk the likelihood of running a non farm firm and the returns to running such firms co vary with agricultural productivity shocks diversification into non farm activities thus provides limited protection against fluctuations in agricultural performance this may explain why ex ante risk has no impact on the likelihood of running a non farm firm it nonetheless hampers non farm enterprise development by repressing investment and inducing sorting into less capital intensive activities

do people avoid opportunities to donate a natural field experiment on recycling and charitable giving abstract we use a natural field experiment to investigate the hypothesis that generosity is partly involuntary by examining whether individuals tend to avoid opportunities to act generously in sweden new recycling machines for bottles and cans with an option of donating the returned deposit to charity were gradually introduced in one of the largest store chains we find a substantial decline in recycling the month these new machines were introduced and a further decline in the following months these results indicate that individuals avoid opportunities to act generously and corroborate findings from both lab and field studies supporting the claim that generous behavior is partly involuntary

return migration and the survival of entrepreneurial activities in egypt summary the literature shows that temporary international migrants have a high propensity to opt for an entrepreneurial activity upon return but the prospects of survival of these activities have not been explored we address this research question using longitudinal egyptian data we find that entrepreneurs migration experience significantly improves the chances of survival of their entrepreneurial activities adopting econometric techniques that control for return migrants nonrandom selection in unobservables we resort to a bivariate probit model and a two stage residual inclusion estimator using the rate of population growth and the real oil price as alternative instruments for migration

is generosity involuntary abstract we estimate the distribution of exit reservation prices in a dictator game the mean exit reservation price equals 82 of the dictator game endowment and only 36 of subjects have exit reservation prices consistent with selfish or social preferences