Economics & Finance / Economic Theory / Development Economics
How a 48-Hour Business Course Boosted Profits by 23% in Rural Mexico
Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico
In rural Mexico, female entrepreneurs run tiny shops earning just $11 a day. Most can't calculate profit or set prices. A randomized experiment gave some of them a free 48-hour business literacy course. The results? Profits jumped 23%, sales rose 25%, and the effects lasted for 2.5 years. But here's the twist: the training didn't just help the best business owners—it actually pushed the worst ones to quit, freeing up market space. And for their untrained neighbors? Their profits dropped by 11% due to higher costs. This video breaks down the study by Gabriela Calderon, Jesse M. Cunha, and Giacomo De Giorgi, published as a working paper in 2013. We'll cover the experiment design, the shocking cost-benefit ratio (a $58 investment yielding $4,394 in returns), and the harsh reality of spillover effects. If you think business training is just theory, this will change your mind.
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