Challenges to Small and Medium-size Businesses in Myanmar: What are They and How do We Know?

48 Pages Posted: 13 Jan 2016 Last revised: 26 Feb 2016

See all articles by Arie Kapteyn

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Saw Htay Wah

University of Southern California

Date Written: February 2016

Abstract

We conducted a field study in the city of Yangon, Myanmar to investigate major obstacles to business development in the region. The analysis focuses on three aspects of the business environment that are considered to be top constraints among Myanmar small and medium enterprises (SMEs): (1) access to credit, (2) access to public services, and (3) access to electricity. By using anchoring vignettes we are both able to correct for possible differences in response scales across respondents and to elicit which characteristics of the business environment are seen as most difficult. Although we find some significant differences in response scales across different groups of respondents, their effects on qualitative conclusions are minor. The analysis of vignette ratings reveals that in terms of access to credit relaxing collateral requirements is considered of prime importance, while access to bank loans is seen as very problematic (equivalent to a 19 percentage points increase in the loan interest rate). Access to public services is another impediment, with cumbersome and time consuming procedures, often necessitating daylong trips to the capital for administrative procedures. Improving such procedures would be equivalent with average annual savings equal to US $4,700 per business. Results from the vignette analysis indicate that getting new electricity connections and unreliable electricity supply are perceived by our respondents to be the most difficult in getting access to electricity.

Keywords: Subjective measures, business environment, differential item functioning, anchoring vignettes, enterprise surveys, Myanmar (Burma)

Suggested Citation

Kapteyn, Arie and Wah, Saw Htay, Challenges to Small and Medium-size Businesses in Myanmar: What are They and How do We Know? (February 2016). CESR-Schaeffer Working Paper No. 2015-030, Available at SSRN: https://ssrn.com/abstract=2714141 or http://dx.doi.org/10.2139/ssrn.2714141

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
Los Angeles, CA 90089-3332
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310-448-5383 (Phone)

IZA Institute of Labor Economics

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Germany

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Saw Htay Wah (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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