What are We Learning from Business Training and Entrepreneurship Evaluations Around the Developing World?

That’s the title of a new review paper by McKenzie and Woodruff.

The cynical take would be “not much”, but they offer a slightly more nuanced answer.

…there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues.
Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest.
Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training.

Unfortunately the all-too-common government and NGO approach to aid is, “how about we elites just go and tell these poor people how to live their lives better.”

This is also known as the “If-only-they-would-listen-to-us” theory of development. Most of the time it is about as successful as you would think, I think.

In the next week or two I should be putting out some slightly different news in a couple of different impact evaluations. First, some evidence that if you give cash with the training… Wha-bam! (The technical economics term for doubling income.)

Second, to my enduring surprise, the ”If-only-they-would-listen-to-us” turns out to be rather good at getting people to change the way they resolve high-stakes land conflicts–essentially persuading them to cooperate better. My intuition in brief is that education and indoctrination is better at norm change than teaching skills.

More to follow. I am experiencing (again) that the last 2% of the paper seems to take 98% of the time….