Working papers and Work in progress


Abstract (Coming soon)

This paper uses a rich panel data set of Indian manufacturing firms to analyze the effects of foreign direct investment (FDI) on various outcomes of domestic firms. We apply recent methodological advances in the estimation of production functions together with detailed product-level information on prices and quantities to estimate physical productivity, markups and marginal costs. Our results indicate the importance of price adjustments which stem from competitive pressure and a pass-through of cost savings to consumers. In line with the previous literature, we find little evidence for spillovers based on commonly used measures of revenue productivity. In contrast, we measure sizable efficiency gains using measures that are not affected by pricing heterogeneity, such as marginal costs and physical productivity. Exploiting exogenous variation from India's FDI liberalization, we provide evidence that the relationship between exposure to FDI and efficiency is causal. Our results suggest that knowledge spills over across product categories within industries and mainly benefits producers of high-quality products. We also provide evidence that FDI spillovers are stronger for joint ventures and when foreign investors enter via acquisitions.


This paper analyzes the effects of horizontal mergers in Indian manufacturing. Detailed information on prices and quantities at the level of narrowly defined product categories allows us to identify merger-pairs with product overlap and non-merging rival firms across a broad set of industries. We apply recent methodological advances in the estimation of production functions to estimate markups, marginal costs and proxies for product quality. Our results indicate that, on average, mergers are associated with increases in prices and markups within the merged entity and its competitors while there is little evidence for cost savings. Further, average product quality seems to increase within merging firms.


In this paper, we assess the impact of commercial registration of household enterprises on their labor productivity and profits. Based on the 2012 and 2018 rounds of the Egyptian Labor Market Panel Surveys, we employ an instrumental variable strategy and find a positive effect of formal registration on profit and a much higher positive effect on labor productivity. The main channels are higher capital intensity and assets. In addition to the owner's gender and education level, labor productivity varies mainly with firms' assets and shared ownership, while profits are mostly determined by the age of the firm and that of its owner. We also find that the positive effect of formality on performance holds for a select category of owners and firms. Finally, our analysis allows us to identify different policy intervention tools for household firms according to their productivity levels and their distance to a threshold of formality fixed costs.


The increased importance of entrepreneurship in developing countries pushed policy-makers to adopt non-cognitive skills training that promote resilience to shocks and foster entrepreneurial mindset. We propose the design of a field experiment in Algeria evaluating the effect of resilience training on informal entrepreneurs’ economic and social well-being. The treatment consists of offering over-the-phone resilience training and classify subjects by initial level of resilience as measured in a baseline household survey. The results of this experiment will increase our understanding of policies related to entrepreneurship programs for smaller firms in developing countries and formalization incentives. It will also answer the policy question whether it is cost effective to offer and promote resilience training via mobile phone.


This paper investigates the role of informal firms’ competition in determining the micro-level effect of cronyism on formal-firms’ productivity in the aftermath of the 2011 Egyptian revolution. Based on the World Bank panel Enterprise Surveys, we follow a constructive approach to indicate politically connected firms based on the findings of the previous literature. Using a propensity score reweighting - difference-in-difference estimator, we find that being a crony firm after the revolution could generate unsustainable gains in terms of productivity. This is mostly due to cronyism externalities that engenders a stronger intensity of informal competition, which jeopardizes any increase in productivity and creates a large disequilibrium at the firm level. We also provide evidence that crony firms’ excess in labor is the main channel through which this effect occurs. Hence, crony firm survival in Egypt depends on their ability to balance between the sustain provision of privileges and the threats imposed by the growth of the informal sector.