Promoting innovation and inclusion in growth potential enterprises: Evidence from Nepal

 

Micro, small and medium-sized enterprises (MSMEs) face numerous challenges to their development and growth. Given the importance of the MSME sector to Nepal’s economy, the government has implemented numerous innovation support programs to encourage the creation and growth of enterprises. Access to finance, appropriate technology, and training are examples of support services provided by the government and international donors. The government is also relying on these programs to advance social development goals such as reducing poverty and creating employment for youth, women, and marginalized communities. However, there are few robust studies demonstrating what works well and why, and whether the intended beneficiaries are indeed benefiting.

This project, led by the Nepal Development Research Institute, will implement a three-prong study that will assess the impact of two innovation support programs and pilot a third intervention to test whether follow-up training can accelerate the growth of MSMEs and promote inclusive innovation. The research will focus on the Micro-enterprise Development Programme for Poverty Alleviation managed by the Ministry of Industry, Commerce and Supplies and the Youth and Small Self-employment Fund managed by the YSEF Secretariat. Additionally, the team will develop and implement a training program for firms benefiting from these programs to test the effect of additional training in supporting firm growth.

The findings will contribute to both scholarly and public policy debates. Specifically, the team will devise evidence-informed recommendations on how these programs could be improved from an equity, diversity and inclusion perspective and what services benefit micro and small firms on the one hand, and firms with growth potential on the other.

This project received Stage 1 funding through the 2020 Evidence for Innovation open competition and a Stage 2 grant in 2022.