Business support for small and medium enterprises in low- and middle-income countries

Abstract

The International Initiative for Impact Evaluation (3ie) is an international grant-making NGO promoting evidence-informed development policies and programmes. We are the global leader in funding, producing and synthesising high-quality evidence of what works, for whom, why and at what cost. We believe that better and policy-relevant evidence will make development more effective and improve people's lives. 3ie systematic reviews 3ie systematic reviews appraise and synthesise the available high-quality evidence on the effectiveness of social and economic development interventions in low-and middle-income countries. These reviews follow scientifically recognised review methods, and are peerreviewed and quality assured according to internationally accepted standards. 3ie is providing leadership in demonstrating rigorous and innovative review methodologies, such as using theory-based approaches suited to inform policy and programming in the dynamic contexts and challenges of low-and middle-income countries. About this reviewBusiness support for small and medium enterprises in low-and middle-income countries: a systematic review, was submitted in partial fulfilment of the requirements of grant SR5.1180 issued under Systematic Review Window 5. This review is available on the 3ie website. 3ie is publishing this report as received from the authors; it has been formatted to 3ie style. This review has also been published in the Campbell Collaboration Library and is available here.All content is the sole responsibility of the authors and does not represent the opinions of 3ie, its donors or its board of commissioners. Any errors are also the sole responsibility of the authors. Comments or queries should be directed to the corresponding author, Caio Piza, ctpiza@worldbank.org Plain language summaryMotivation: Large amounts of funding are going towards programmes to support small businesses (Small and Medium Enterprises, or SMEs) in low-and middle-income countries, based on the assumption that those businesses will make profits and generate employment, and thus create economic growth and reduce poverty. However, it is not clear how much evidence exists to show whether those results are occurring and for which groups. This is the first systematic review of the evidence regarding these programmes.Approach: The review looks at measures of SME performance including revenues, profits, and productivity, as well as the firms' ability to generate employment and their labour productivity. We conducted a systematic review of the available quantitative evidence, and also incorporated qualitative studies to better understand the mechanisms at work. We searched for published and unpublished literature, using inclusion criteria according to the study protocol. We critically appraised the studies included, and conducted statistical metaanalysis to gain an overview of the findings and meta-regression to understand heterogeneity.Results: Our study finds that business' support to SMEs improves their performance, their ability to create jobs, ...

The Evidence Is In: How Should Youth Employment Programs In Low-Income Countries Be Designed?

“…Nonetheless, some evidence is available on successful interventions to increase demand for labor in modern non-agricultural firms. 11 In a systematic review for 3ie, Piza et al, (2016) argue that impact evaluation evidence shows that business support services for small and medium enterprises (SMEs)training, management support, credit lines, innovation policies, and interventions that encourage firms to coordinate to realize agglomeration externalities-do increase employment, where that outcome has been measured. They also found that the number of impact evaluations is small and the interventions too heterogeneous to tease out which ones are more effective.…”

“…Although the McKenzie and Woodruff (2013) review of business training interventions is a key systematic review, it did not cover employment outcomes at all.11 In this section, a large share of the evidence comes from middle income countries. The applications to lower income countries are highlighted.12 Similar to the supply-side interventions, a number of the demand-side programs included in thePiza et al, (2016) study used multiple interventions, making it difficult to determine which one actually made a difference.…”

Mixing and matching: using qualitative methods to improve quantitative impact evaluations (IEs) and systematic reviews (SRs) of development outcomes

“…King, Samii, and Snilstveit 2010), or assess the applicability of findings in particular contexts (e.g. Piza et al 2016). • Similarly, the purpose of sequential exploratory design in the context of a systematic review of effects is for the qualitative findings to inform the quantitative data collection instruments and/or approach to synthesis.…”

Private Sector Development Finance to Support the ‘Missing Middle’

“…Due to the prevalence of studies of matching grants, they are one of the few PSD instruments that have been systematically analysed, with evidence showing a positive effect on firm performance and employment creation (Piza et al, 2016). Piza et al's (2016) meta-analysis found matching grants to have a positive effect size of 0.12 standard deviations on employment creation. Figure 2 shows the effect size of each on employment of each of the study's included in Piza et al's (2016) meta-analysis sample.…”

“…empirically, but there is limited evidence of the impacts of non-traditional and innovative financing instruments (Mallen & Bungey, 2019;Piza et al, 2016). Of those financial instruments that have been systematically reviewed, matching grants, technical assistance and tax simplification have been found to positively affect firms' performance and job creation, and technical assistance has been found to improve labour productivity (Piza et al, 2016).…”