This post has some interesting findings in the development economics/SME realm – in particular the impact of lack of finance for SMEs on exports and thus employment, innovation and growth. As in microfinance, the micro-level, anecdotal evidence differs from statistical analysis; Thorsten Beck et al previously found that although there is a correlation between SMEs and growth they cannot say that one causes the other.
Other interesting subjects include the benefits of diversified conglomerates in emerging economies – which they say is derived from internal capital markets, a phrasing which does not necessarily highlight their primary advantage; that of helping the company weather shocks.
In the same vein, but not mentioned in the blog, is the phenomena of clustering in emerging economies. Why do all the TV, scooter, book etc sellers in Hyderabad group together? Couldn’t they make more money by serving customers closer to their home and raising prices for the convenience? Surely, some entrepreneurial trader would have discovered the profit, so the answer is not only in tradition. Why does it take big corporate building malls to realize underlying value? Answers anybody?