Poverty traps in industries with low knowledge- and investment barriers
Magnus Hatlebakk
National Labour Academy (NLA)
We study barriers to investment in industries with low knowledge- and investment barriers. The focus is on people who have the necessary knowledge and potential access to credit, but do not make apparently profitable investments. The project started with a household and industry survey of barriers to investment in low-entry-cost industries. Next, we conducted a case study of rickshaw cyclists who may be renting a bicycle, rather than buying one. One-two years of rent is sufficient to purchase a rickshaw that may last more than ten years. In explaining the lack of investments we investigate the role of poverty as well as time-preferences, using simple experiments of intertemporal choice.
Publication by Shiva Sharma, NLA: Very Small Enterprises in Nepal.
