LOCALIZING DEVELOPMENT: DOES PARTICIPATION WORK?
Business training in Pakistan reduced business failure, raised consumption and income, and improved business practices . . . . . . but the gains were confined largely to men.
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for working capital, savings, and consumption. The results at midline suggest a significant increase in the number of hours worked as well as a 50 percent increase in net income. Given the interest rates facing young adults, these investments would likely not have been made in the absence of grant funding, underscoring the need to expand access to capital markets for the poor and for young people, who lack assets as well as employment experience. Gine and Mansuri (2012) assess a program to provide business training and microloans to members of rural community organizations established by the National Rural Support Program (NRSP) and funded by the Pakistan Poverty Alleviation Fund (PPAF). Many community organization members already had some experience with microcredit loans from NRSP. Community organizations were randomized into two groups, one of which was offered the opportunity to obtain eight days of business training at no cost. About two-thirds of people offered training took it. Both groups were also offered the opportunity to apply for a loan that was about five times the size of the standard loan (the base loan was about Rs. 20,000, about six to seven months of daily wage labor earnings for one household member). Access to the loan was randomized through a lottery in which about half of applicants were chosen. Gine and Mansuri find that business training reduced business failure and that the best businesses survived. Training also raised consumption, increased income (by about 12 percent), and improved business practices. However, the gains were confined largely to men.69 Uptake of the loan was modest, with less than a third of eligible members applying, and the authors find no additional income gain for lottery winners. Alwang, Gacitua-Mario, and Centurion (2008) report on PRODECO, a project that supports group-based income-generating activities in the southern departments of Itapua, Misiones, and Neembucu in Paraguay. Its main objectives are to empower marginalized groups and to strengthen local government capacity to identify, design, implement, and monitor community development projects. PRODECO provides grants to eligible groups for productive investments. Groups are formed in targeted communities by “development agents,” which can be NGOs or public sector employees. Once the income-generating activity is identified, groups are trained in project formulation, technical skills related to the project, and business management and marketing basics. Approved projects can receive up to $30,000.70