Evaluating the effectiveness of ChileCompra's Entrepreneurship Centers policy

Abstract

AbstractMicroenterprise support programs (MESPs) have gained popularity as a modern development policy since the 1980s, with an increasing number of countries adopting this strategy to enhance economic growth. However, few studies have examined the effectiveness of these programs. This paper evaluates one of these programs, Centros de Emprendimiento ChileCompra in Chile. This initiative has a dual mandate – to serve as a primary vehicle for national procurement and to serve as a microenterprise support program. The microenterprise support component consists of regional centers that provide entrepreneurs with training in business plan development, financing, and taxation to enable greater participation among microenterprises in the public procurement market. Using 8 years of panel data on program contracts from 2007 to 2014, we assess the impact of ChileCompra's microenterprise participation component with regards to the share of the total business and the share of revenues. Our results indicate that the program resulted in an increased share of contracts going to microenterprises at the national level, but that results were uneven at the local level. In many cases, contrary to the policy's goals, the share of microenterprises receiving contracts through ChileCompra declined substantially.