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Supporting small firms in a fragile context: Comparing matching and cash grants in Burkina Faso

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  • Grimm, Michael
  • Soubeiga, Sidiki
  • Weber, Michael

Abstract

We used a randomized controlled trial to compare matching grants earmarked for technical training and consulting services with more flexible cash grants and with a control group. The experiment was implemented in a semi-urban and rural fragile setting where subsidizing innovative activities might be particularly important. Firms were selected on the basis of a business plan competition. After two years, beneficiaries of cash grants showed higher survival rates, improved business practices, a higher degree of formalization, and more activities for innovation relative to recipients of matching grants and the control group, but we saw no effects on profits, sales, and employment. Across all outcomes, beneficiaries of cash grants performed better than beneficiaries of matching grants, for them the treatment effects are smaller and often insignificant, though implementation costs were higher. Recipients of cash grants also increased their capital stock more and were more resilient to the COVID-19 crisis.

Suggested Citation

  • Grimm, Michael & Soubeiga, Sidiki & Weber, Michael, 2024. "Supporting small firms in a fragile context: Comparing matching and cash grants in Burkina Faso," Journal of Development Economics, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:deveco:v:171:y:2024:i:c:s0304387824000932
    DOI: 10.1016/j.jdeveco.2024.103344
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    More about this item

    Keywords

    Matching grants; Cash grants; Technical training and consulting services; Small firms; Business plan competition; Fragile countries;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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