Business plan competition and business incubation and acceleration programs are emerging industrial policy instruments which intend to catalyze industrialization and job creation through identifying and supporting high-growth potential entrepreneurs (gazelles) and nurturing local entrepreneurship. However, empirical evidence on the effectiveness of these policies is scant. This study evaluates the causal effect of the training intervention of the business plan competitions in Ethiopia on business entry and expansion using a fuzzy regression discontinuity design by exploiting business plan scores and exogenous cut-off points. Outcome data from the universe of about 500 applicants were collected about a year after applying to the competitions through by a carefully designed survey, and self-reported outcomes were independently verified with administrative data whenever possible.
The result revealed that, in any measure of business success, the business performance of the training beneficiaries of the program was not better than their rejected counterparts. This is due to the fact that, at least partly, about 75% of the rejected applicants were able to get similar trainings in other programs and thus they are not pure controls. Though the study is not informative about the effectiveness of the program, the substantial take-up of the control group in substitute programs documented in this study could be helpful to explain the modest or negligible impacts the entrepreneurship training programs reported in previous studies.
