Export Promotion Along Supply Chains: Experimental Evidence from Rwanda’s Export Credit Guarantee Facility (with Jie Bai, Christian Lippitsch, Ignacio Marra de Artiñano, and Stephen Nyarko)
Export-led growth has long been seen as a key to unlocking structural transformation. In pursuit of this goal, governments often use industrial policies such as state-guaranteed loans to alleviate that credit constraints that may prevent firms from making investments needed to access world markets. A central question for such policies is not only whether to intervene, but where along the supply chain to target support. In partnership with the Ministry of Trade and Industry and the Development Bank of Rwanda, we run a randomized control trial of the Export Credit Guarantee Facility, which provides collateral guarantees on large loans (~$125k) to firms along export supply chains. Using administrative data to map firm-to-firm supply chains, we randomize whether we treat (i) upstream suppliers of exporters, (ii) downstream exporters, or (iii) both. Combining this administrative data with original firm surveys, we measure the direct impacts on treated firms, including total borrowing, exporting, and firm performance, as well as the spillovers along the supply chain. We use these direct and indirect effects to discipline a structural model of trade and credit constraints, providing an empirical test of theories on the optimal targeting of industrial policy in production networks.
Search Costs and Firm-to-Firm Linkages: Experimental Evidence from Trade Fairs (with Jie Bai, Federico Huneeus, Nicolas Jimenez, and Yuhei Miyauchi)
Connections between firms are critical for economic growth, providing new business, opportunities to learn-by-doing, and access to higher-quality inputs. What prevents firms from forming these connections? One possibility is information frictions. Industrial trade fairs are a long-standing solution to such frictions, coordinating a centralized meeting point for buyers and suppliers. In partnership with the largest operator of industrial fairs in Chile, we run a two-sided randomized control trial at the country’s largest trade fairs (aquaculture and mining). On the supplier side, we subsidize randomly selected firms to host a booth at the fair; on the buyer side, we introduce randomly selected buyers to suppliers in randomized business meetings. This two-sided randomization distinguishes whether new connections crowd out incumbent suppliers or represent new aggregate business. Combining the experimental variation with detailed administrative tax data and firm surveys, we trace the direct effects on participants and the indirect effects on their competitors and trading partners. To assess the aggregate value of these new linkages, we build a structural model of firm-to-firm matching.
Striving for Quality: The Impact of Certification on Market Access in Rwanda (with Jie Bai, Vittorio Bassi, Christian Lippitsch, Ignacio Marra de Artiñano, and Stephen Nyarko)
Quality certification is often seen as a key institution for unlocking market access and fostering quality upgrading in low-income countries. By meeting stricter quality, safety, and regulatory standards, certification may enable firms to integrate into more demanding and higher-value supply chains, both domestically and in global value chains, with productivity gains that propagate through supplier and buyer networks. And yet, despite its potential, existing evidence on the impact of certification is predominantly observational, making it hard to disentangle its causal effect. In partnership with the Rwanda Standards Board, we run a randomized control trial of Zamukana Ubuziranenge (“Striving for Quality”), a national program that provides technical assistance and subsidizes the certification fees for small and medium enterprises seeking product and system certifications. Combining administrative tax data on the universe of firm-to-firm transactions with firm surveys and product quality testing, we ask three questions. First, what is the impact of certification on firms’ market access and performance, including sales, profits, employment, and exports? Second, does certification drive quality upgrading, or does it mainly signal existing quality? Third, how does certification reshape firms’ buyer-supplier networks, both shifting which partners they trade with and inducing quality upgrading among their existing suppliers and buyers?
Which Information Frictions Constrain Firm-to-Firm Linkages? Experimental Evidence from Rwanda (with Jie Bai, Vittorio Bassi, Christian Lippitsch, and Ignacio Marra de Artiñano)
Information frictions have long been thought to constrain firm-to-firm connections, but less is known about which type of friction matters: a buyer may easily observe the products a supplier offers, yet struggle to verify harder-to-observe characteristics such as the supplier’s capacity, reliability, or quality. In partnership with the Rwandan Ministry of Trade and Industry, we study a government platform that connects small and medium enterprises with buyers by drawing on administrative data to verify these otherwise hidden characteristics. Firms’ profiles display “badges,” automatically cross-verified in administrative tax and certification records, that document hard-to-observe aspects of a firm’s track record. We will run a randomized control trial that varies both access to the platform and the badges displayed on firms’ profiles. The badge variation identifies which of these characteristics trading partners value most. Linked to transaction-level data on the full firm-to-firm network, this design will shed light on the specific information frictions that constrain supply chain linkages, and on whether such platforms can help firms overcome them.
Land Consolidation and Agricultural Productivity: Experimental Evidence from Kenya (with Lorenzo Casaburi, Kevin Donovan, and Jack Willis)
Differences in agricultural productivity between rich and poor countries are stark. One often-postulated driver is small farm size, which can preclude investments that require scale, such as mechanization and irrigation. We will provide the first direct experimental evidence on the returns to land consolidation. We partner with Cinch, a company in Kenya that leases small, adjacent plots from smallholder farmers and combines them into a single large farm, unlocking these scale investments. To measure the returns to scale, we will randomize the location of Cinch’s irrigation borehole, which determines which plots are consolidated. We will also track the landowning households whose plots are leased to Cinch, studying the structural adjustment set in motion as they move off the farm and into non-agricultural work. These shifts will discipline a quantitative model of economies of scale in agriculture, labor reallocation, and structural transformation.
