The challenge
Almost all firms in developing countries have fewer than ten workers, with a modal size of one; it was unclear whether policy could identify and help potential high-growth entrepreneurs.
The case
The Youth Enterprise With Innovation in Nigeria (YouWiN!) programme is a large-scale national business plan competition for young entrepreneurs, run by Nigeria's Ministry of Finance, Ministry of Communication Technology and Ministry of Youth Development with support from DFID and the World Bank, aiming to encourage innovation and job creation. The first round attracted almost 24,000 applicants, and applicants who passed a first stage received a four-day business plan training course. David McKenzie of the World Bank evaluated it using random assignment of US$34 million in grants among semi-finalists, giving each winner approximately US$50,000, with surveys from December 2011 to November 2016. Over five years, winning led to greater firm entry, more survival, higher profits and sales, and higher employment, including increases of over 20 percentage points in the likelihood of a firm having ten or more workers.
Why it worked
The evaluation compares randomly chosen winners with other semi-finalists, so it shows the effect of a grant for applicants already judged promising rather than for all small businesses; the AER paper gives the randomly assigned grant total as US$34 million and the World Bank's data catalogue as US$36 million.
Sources
- McKenzie, D. (2017). Identifying and spurring high-growth entrepreneurship: Experimental evidence from a business plan competition. American Economic Review, 107(8), 2278–2307.
- World Bank Microdata Library. Nigeria – Youth Enterprise With Innovation in Nigeria (YouWiN!) Program Impact Evaluation 2011–2016.
- AEA RCT Registry. Evaluating a nationwide business plan competition (AEARCTR-0000078).
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