Christopher Woodruff

Enterprise Recovery Following Natural Disasters

Using data from surveys of enterprises in Sri Lanka after the December 2004 tsunami, the authors undertake the first microeconomic study of the recovery of the private firms in a developing country following a major natural disaster. Disaster recovery in low-income countries is characterized by the prevalence of relief aid rather than of insurance payments; the data show this distinction has important consequences. The data indicate that aid provided directly to households correlates reasonably well with reported losses of household assets, but is uncorrelated with reported losses of business assets. Business recovery is found to be slower than commonly assumed, with disaster-affected enterprises lagging behind unaffected comparable firms more than three years after the disaster. Using data from random cash grants provided by the project, the paper shows that direct aid is more important in the recovery of enterprises operating in the retail sector than for those operating in the manufacturing and service sectors.

One-time transfers of cash or capital have long-lasting effects on microenterprises in Sri Lanka

Cashing Up Do small businesses in developing economies benefit from an infusion of cash or of capital, such as inventory or materials, and is the effect a momentary blip or a sustained expansion? De Mel et al. (p. 962) have extended their study of one-time cash or capital transfers to a group of randomized business owners in Sri Lanka to look at the status of the businesses 5 years later and find an increased likelihood of survival and higher profits for male-owned enterprises, but no significant effects on female-owned businesses. The authors suggest that capital transfers are more likely to be used by male-owned firms to grow the business, but more likely to be “cashed-out” from female-owned firms and diverted to household uses. Small businesses run by the urban poor enjoy greater profits and longevity 5 years after receiving a helping hand. Standard economic theory suggests that one-time business grants can have at most temporary effects, and accordingly, policies to increase incomes of the self-employed in developing countries typically rely on sustained engagement. In contrast, we found long-lasting impacts from one-time grants given in a randomized experiment to subsistence firms. Five years after we gave

Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns

100 or

What are we learning from business training and entrepreneurship evaluations around the developing world

200 to 115 of 197 male and 100 of 190 female Sri Lankan microenterprise owners, we found 10-percentage-point-higher enterprise survival rates, and

Business Training and Female Enterprise Start-Up, Growth, and Dynamics: Experimental Evidence from Sri Lanka

8-to-

The Demand for, and Consequences of, Formalization Among Informal Firms in Sri Lanka

12-per-month-higher profits for male-owned businesses that received the grants. Female-owned businesses showed no long-term (or short-term) impacts. Our follow-up investigation interviewed 94% of the original sample and collected survivorship data from the remaining 6%, demonstrating that tracking long-term outcomes is both feasible and worthwhile. The results suggest that one-off grants may have lasting impacts on some types of subsistence firms, challenging the view that sustained engagement is always required.