Lorem ispum dolor lorem ipsum dolor ametIn-depth Studies Nay Pyi Taw, 28 September 2017
Henrik Hansen, John Rand, Paula Rodriguez, Finn Tarp and Neda Trifkovic
Overview • 2 in-depth studies based on 2017 data (completed)
– Industrial Agglomeration in Myanmar
– Managerial attributes and enterprise access to formal credit in Myanmar
• 2 studies based on 2018 data (work in progress)
– MEMS 2018 Lab-in-the-Field Experiment Report
– Governance of global value chains, state and small businesses: The case of timber in Myanmar
Industrial Agglomeration in Myanmar: Introduction
• Concentration of economic activity
• Benefits
• Drawbacks
• We investigate labor productivity differentials of operating/not operating in an industrial zone in Myanmar for private manufacturing enterprises
• We study implications for working conditions, such as labor share in value added, employee wages, working hours, social benefits, and female labor force participation
• We compare the outcomes of enterprises from industrial zones and enterprises from naturally formed industrial clusters
Industrial Agglomeration in Myanmar: Productivity (1) (2) (3) (4) (5) Industrial zone 0.122***
(0.041) 0.128*** (0.042)
0.000 (0.000)
Cluster EGI
-0.726*** (0.074)
Cluster D
0.000 (0.002)
Cluster 2
-0.042 (0.032)
4.751*** (0.324)
4.798*** (0.324)
4.747*** (0.324)
4.746*** (0.324)
Other controls Yes Yes Yes Yes Yes Sector FE Yes Yes Yes Yes Yes Township FE Yes Yes Yes Yes Yes Observations 2,467 2,467 2,467 2,467 2,467 R2 0.83 0.83 0.83 0.83 0.83
(1)
(2)
(3)
(4)
(5)
0.000 (0.000)
Cluster EGI
-0.726*** (0.074)
Cluster D
0.000 (0.002)
Cluster 2
-0.042 (0.032)
Yes
Yes
Yes
Yes
Yes
Observations
2,467
2,467
2,467
2,467
2,467
R2
0.83
0.83
0.83
0.83
0.83
Industrial Agglomeration in Myanmar: Employee outcomes (1) (2) (3) (4) (5) Share of female
labor Wage share in value added
Employee wage (ln)
1.924*** (0.458)
9.983*** (0.204)
-0.180 (0.309)
1.769*** (0.081)
Controls Yes Yes Yes Yes Yes State FE Yes Yes Yes Yes Yes Sector FE Yes Yes Yes Yes Yes Observations 2,467 2,467 6,632 6,632 6,632 R2 0.38 0.10 0.41 0.20 0.15
(1)
(2)
(3)
(4)
(5)
Employee wage (ln)
Managerial attributes and enterprise access to formal credit in Myanmar: Introduction • McKenzie and Woodruff (2017) find a positive relationship between owner/manager
capacity and the ease with which firm owners/managers learn and adopt good business practices
– They show that the implementation of business practices—related to financial planning, marketing, and record keeping—increases firm-level productivity
– However, their study does not say much about the mechanisms linking managerial abilities and firm productivity
• Differences in risk preferences and gender of the owner and manager have been linked to both credit demand and firm performance
Managerial attributes and enterprise access to formal credit in Myanmar: Objectives
• We analyse the importance of owner/manager attributes for enterprise debt demand and credit constraints
• We use questions about risk attitudes and create an index measuring firm owner/manager attitudes towards risk and investigate how they affect credit demand
• We investigate how gender of the firm owner/manager affects debt demand and credit constraints
MEMS 2018 Lab-in-the-Field Experiments
• Business success in SMEs
– External factors: various aspects of the business environment
• The role of government in creating an environment that is conducive to SME success
• Access to finance and training, functional legal and regulatory framework
– Internal aspects of SME success: both the organizational variables and the characteristics of the small business owners or managers
• Managerial and planning skills, overall entrepreneurial capabilities
• Risk preferences, trustworthiness and pro-sociality have been found to affect market performance
MEMS 2018 Lab-in-the-Field Experiments: Objectives
• We have incorporated a lab-in-the-field experiment in the Myanmar Enterprise Monitoring System project, as experimental data can help us shed the light on the role of owners’ personal preferences and behavior in determining SME success
• The lab-in-the-field experiment within the MEMS project comprises five behavioral games: dictator, bargaining, trust, public goods and risk preference elicitation game
• The games were presented to participants in this exact order in a web-based application created in oTree
0.0
0.2
0.4
0.6
0.8
1.0
Less pro-social More pro-social
Risk loving Risk averse
Risk loving Risk averse
• Even though in theory, pro-sociality could have implications for business success, we have not discovered a significant relationship between preference for pro-sociality and enterprise profit
• The risk preference measure does not correlate with enterprise performance
• Experimentally measured personal preferences ay not factor in strongly in business decisions and performance when the business environment is not supportive for SME development
• The findings emphasize the role of business environment over personal preferences for business performance in Myanmar, indicating a need for policies that are supportive of the SME sector development, such as possibly improving the investment climate and functioning of cooperative initiatives, such as business associations
Governance of global value chains, state and small businesses: The case of timber in Myanmar • Rapid deforestation has been a cause of several policies related to forest
management
– Logging ban, export ban
• We analyse the regulatory framework under which enterprises in the wood industry operate and how international ecological discourses affect forest management and private business from the wood industry in Myanmar
• How does the state absorb and apply to policy differing requirements, while so many small businesses depend on timber to survive?
0 10
0 20
0 30
0 40
0 Ex
po rt
v al
ue (m
ill io
n U
SD )
IND CHN THA BGD HKG SGP VNM EU AND ARE JPN MYS USA AUS PAK KOR
Performance of wood industry
0 5 10 15 20 Profits per employee (million MMK)
Leather Motor vehicles
Apparel Wood
Tobacco
0 5 10 15 20 Value added per employee (million MMK)
Leather Motor vehicles
Apparel Electrical machinery Other transport eq.
Wood Textiles
Paper Tobacco
Results
• The state is responsible for the protection of forest resources and the promotion of environmental regulation
– State is the only permitted producer
– Conflicting interests between the Ministry of Agriculture, Livestock and Irrigation and the Department of Forestry, as they are currently building their individual institutional objectives on the same lands
– This may result in environmental regulations being sidelined
– Myanmar Forest Certification Committee as a way of gaining access to more lucrative (and stringent) international timber markets
• Regulatory pressure: licensees, fees, wood access restrictions, increased price of inputs, wood quality deficiencies, declining demand
– Small sawmills especially affected
Slide Number 5
Industrial Agglomeration in Myanmar: Employee outcomes
Managerial attributes and enterprise access to formal credit in Myanmar: Introduction
Managerial attributes and enterprise access to formal credit in Myanmar: Objectives
Slide Number 10
Slide Number 13
Slide Number 14
MEMS 2018 Lab-in-the-Field Experiments: Conclusion
Governance of global value chains, state and small businesses: The case of timber in Myanmar
Slide Number 17
Slide Number 18