Constrained Potential: A Characterisation of Mexican Microenterprises

Arbeitspapier

This paper investigates the existence and nature of constraints prevailing among Mexican microenterprises. It provides inter-temporal insights by relying on firm-level data spanning from 1994 to 2012. A performance index is defined based on firm levels of capital stock and monthly profits, and is used to estimate the empirical probability of a business's success. The predicted values are used to classify every microenterprise into one of three categories: upper, middle, or lower segment. Overall, the study provides evidence of constrained productivity and capital misallocation. Specifically, middle-segment firms exhibit entrepreneurial features and their average marginal returns are 15 percent. Because this segment faces mainly external constraints, cost-effective interventions are plausible. Regarding the lower-segment firms, it is estimated that their average monthly marginal returns are 30 per cent, compared to 1 per cent for the upper segment. It is also shown that, over time, the share that middle-segment firms represent relative to all microenterprises increased from 16 to 22 percent. Lastly, the sources of variation in monthly profits among segments are explored using the Oaxaca-Blinder decomposition method.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GIGA Working Papers ; No. 309

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Firm Behavior: Empirical Analysis ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Micro-Business History: Latin America; Caribbean ; Microeconomic Analyses of Economic Development ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: microenterprises ; returns to capital ; constrained productivity ; Mexico ; decomposition method ; empirical probability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Negrete Garcia, Ana Karen
• Event: Veröffentlichung
• (who): German Institute of Global and Area Studies (GIGA)
• (where): Hamburg
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/175429
• Last update: 10.03.2025, 11:42 AM CET