Market Access Complementarity
RCTReview
Traditional supply-side business interventions, such as microcredit expansions and general entrepreneurship training, frequently yield minimal impact on micro-enterprise profit growth.
Picture this
Giving a small workshop owner a loan or an accounting course without new buyers is like giving a driver a full tank of gas without a road, whereas connecting them to wealthy customers creates the demand that drives business growth.
What the evidence says
Connecting firms to export markets increased monthly profits by 26 percent and unit prices by 43 percent, substantially exceeding the typical negligible profit gains from microcredit and training programs.
- Who was studied
- N = 219 small rug-producing firms with fewer than 5 employees in Fowa, Egypt.
- How
- Randomized Controlled Trial comparing demand-side market access interventions against documented impacts of microfinance and training literature over a three-year period.
What to do
Combine or prioritize buyer-matching and market access interventions alongside traditional microfinance or training programs for micro-enterprises in low- and middle-income regions.
From the source
"The intervention's effect on firm profits was large relative to the effect of other interventions targeted at entrepreneurs, such as credit access initiatives and business training programs, which have had limited impacts on profits for similar firms."
egyptian-rug-firms-weave-their-way-into-foreign-markets.pdf