Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Worldwide 600 million jobs are needed over the next 15 years to keep employment rates at their current level. Governments, non-governmental organizations and donors spend on targeted programs and broader policies to enhance employment creation and the creation of new firms. Because most employment in low and middle income countries is in micro, small and medium-sized enterprises, these firms are especially targeted by such interventions. Despite these efforts, not much is known about which of these interventions are really effective and under which conditions particular interventions work. This systematic review synthesizes the existing evidence on the impact of these programs. Overall the review shows that creating employment is a very complex challenge. Many conditions have to be met before interventions in favor of individual enterprises do not only improve business practices and performance but also lead to additional jobs. A striking finding is that the study design matters for the impacts found; randomized controlled trials find systematically smaller effects than quasi-experimental studies. A significant shortcoming of the literature is that almost nothing is known about long term effects and cost effectiveness. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: D22, G21, J21, O10

The Impact of Business Support Services for Small and Medium Enterprises on Firm Performance in Low- and Middle-Income Countries: A Meta-Analysis

“…Figure 3 shows that the evidence from 18 countries, most of which are in the Latin American region. As noted in Grimm and Paffhausen (2015), this could be because countries in this region have many experiences with active labor market policies over the past two decades. For firm performances, we grouped various outcomes such as profits, revenues, sales, added value, stock of assets, return on assets, gross production, and firm productivity (measured as total factor productivity).…”

“…These businesses, especially in LMICs, comprise less productive or informal enterprises with only a few employees at the fringes of markets. This is a major difference in our review when compared to Grimm and Paffhausen (2015) who included studies focused on self-employed and microfinance. Further, these enterprises are often ineligible for the public interventions covered in this review.…”

“…Similarly, Cho and Honorati (2014) focus on interventions promoting entrepreneurship among potential or current entrepreneurs. Finally, Grimm and Paffhausen (2015) provide a review more similar to this work by analyzing the impact of various types of SME support, but their work focuses only on employment outcomes and includes interventions with micro-entrepreneurs (for example, microfinance) and, in few cases, potential entrepreneurs.…”

The Impact of Business Support Services for Small and Medium Enterprises on Firm Performance in Low -and Middle- Income Countries: A Meta-Analysis

“…As noted in Grimm and Paffhausen (2015), this could be because countries in this region have many experiences with active labor market policies over the past two decades. For firm performances, we grouped various outcomes such as profits, revenues, sales, added value, stock of assets, return on assets, gross production, and firm productivity (measured as total factor productivity).…”

“…We did not conduct moderator analysis by all types of global region, only for those regions where we had sufficient observations to undertake 15 Studies were done in different countries, different years, and scale as some used administrative data and other small-scale RCTs. 16 For instance, a paper by Grimm and Paffhausen (2015) studies a similar issue but focuses only on employment outcomes. Their search was done after 1990 and only one paper from prior to the year 2000 (Fretwell et al, 1999) was found.…”