This paper provides a non-technical summary of a framework for evaluating the transition impact (social returns) of any infrastructure investment that reduces transaction costs and thereby intensifies product market competition. The framework applies both to physical and institutional infrastructure. We show that infrastructure generates welfare gains by improving the ability of the market to w...

This paperexplores theconsequences of improvingpropertyrights tofacilitate the use of fixed assets as collateral, popularly attributed to the influential policy advocate Hernando de Soto. We use an equilibrium model of a credit market with moral hazardtocharacterizethetheoretical effects andalsodevelopa quantitative analysis using data from Sri Lanka. We show that the effects are likely to be n...

Using data from a randomized control trial in Sri Lanka, this paper explores whether cash and in-kind grants helped microenterprises approach the productivity level of SMEs. The paper first estimates production functions and subsequently treatment effects on TFP levels. Most significantly, more able and more risk-averse owners benefit from the larger in-kind grant. Also, the larger in-kind gran...

Over the last couple of decades, it has become a commonplace to claim that “institutions matter” for economic development. Yet, institutions are not exogenous but the result of human action. It is argued here that the values and norms held by substantial parts of society’s members are an important determinant of its institutions. It is further argued that values and norms have both a direct and...

This paper investigates an unexplored rationale for organizations to enter into joint ventures. After a review of the theoretical and empirical literature on joint ventures, it develops a model in which projects require investments over time under conditions of autocorrelated productivity shocks. Internal and external interest groups are likely to pressurize owners into paying out early revenue...

This paper explores the institution of apprenticeship in Ghana. A model is presented where apprenticeship training is highly idiosyncratic, increasing an individual's productivity in the current firm, but not in any other firm. Still, individuals are willing to fund apprenticeships as they can reap the returns to the specific training of apprenticeship if they manage to acquire the capital requ...

Information asymmetries are a well-recognized impediment to market efficiency. When quality is not observable by prospective buyers, the quality of marketed goods will suffer, and the volume of trade will be depressed. Using data from more than 2,000 maize samples collected in four Kenyan provinces, we show that the presence of aflatoxin, an invisible and dangerous fungal contaminant, is not re...