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Infrastructure and Small Firms in India

Institutions & Governance India

How do large-scale infrastructure projects affect small, informal firms in India? Developing countries and international funders are spending billions of dollars on large-scale infrastructure projects around the world. These investments are often justified on the grounds that they drive economic growth. In India, growth in the informal sector is critical to economic growth, given that over 70 percent of workers are employed in informal firms and the informal sector makes up 50 percent of the country’s GDP. Using large-scale administrative datasets and quasi-experimental methods, this project estimates the effects of road construction and massive electrification projects on small firms. Findings will inform understanding of the barriers to small firm growth, thus providing useful insights to ongoing and future infrastructure projects both in India and globally. Results forthcoming.

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