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Can Government Intervention Make Firms More Investment Ready? A Randomized Experiment in the Western Balkans

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  • Ana Paula Cusolito

    (World Bank)

  • Ernest Dautovic

    (European Central Bank and University of Lausanne)

  • David McKenzie

    (World Bank)

Abstract

Innovative firms with good ideas may still struggle to fine-tune them to the stage where they can attract outside funding. We conduct a five-country randomized experiment that tests the impact of an investment readiness program. Firms then pitched their ideas to independent judges. The program resulted in a 0.3 standard deviation increase in the investment readiness score. Two years later, the average impacts on firm investment outcomes are positive but small in magnitude and not statistically significant. Larger and statistically significant impacts on receiving outside funding occur for smaller firms and for firms with lower likelihoods of otherwise being funded.

Suggested Citation

  • Ana Paula Cusolito & Ernest Dautovic & David McKenzie, 2021. "Can Government Intervention Make Firms More Investment Ready? A Randomized Experiment in the Western Balkans," The Review of Economics and Statistics, MIT Press, vol. 103(3), pages 428-442, July.
    • Handle: RePEc:tpr:restat:v:103:y:2021:i:3:p:428-442
    DOI: 10.1162/rest_a_00882
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    Cited by:

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    2. Lafortune, Jeanne & Pugatch, Todd & Tessada, José & Ubfal, Diego, 2022. "Can Interactive Online Training Make High School Students More Entrepreneurial? Experimental Evidence from Rwanda," IZA Discussion Papers 15064, Institute of Labor Economics (IZA).
    3. Cusolito, Ana P. & Darova, Ornella & McKenzie, David, 2023. "Capacity building as a route to export market expansion: A six-country experiment in the Western Balkans," Journal of International Economics, Elsevier, vol. 144(C).
    4. Cheng, Bo & Guo, Zhuming & Xiong, Ting & Qiu, Baoyin, 2023. "Does the administrative approval reform impact firm's investment decisions?," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1052-1067.
    5. Maran, Raluca, 2022. "Improving MSMEs’ access to start-up financing in ASEAN countries," MPRA Paper 114501, University Library of Munich, Germany.
    6. Gonzalez-Uribe, Juanita & Hmaddi, Ouafaa, 2022. "The multi-dimensional impacts of business accelerators: what does the research tell us?," LSE Research Online Documents on Economics 115461, London School of Economics and Political Science, LSE Library.

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    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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