Abhijit Banerjee: prediction

Transcript context

…One of the early papers in your career — you seem to be arguing there was too much petty entrepreneurship in emerging economies. Do you think that’s still the case? And if so, how do those economies make the shift away from that? I don’t see a way for them to make a shift out, to be honest. This is why I think this whole literature on universal basic income and microcredit and all these ways of creating more entrepreneurs — in some ways, I think this literature is sort of stuck in this place where they’re trying to get most of these petty entrepreneurs to become a little bigger. I think that right now, we don’t see a way to do what I think needs to be done, which is pick the best among these people and make them much, much bigger because I think the way petty entrepreneurs have been absorbed into the economy historically has been by making some people being very successful, employing lots of people and creating large enterprises. People give the example of Italy, but if you study it carefully, even in Italy, a lot of the reason why the petty entrepreneurs can get somewhere is because there’s huge coordination by some brand name, Benetton being the classic example. It’s not obvious to me that we are, right now, even thinking properly about a mechanism for getting the smallest entrepreneurs out of what they’re doing and into the labor market. What do you think is the nature of the positive externality for manufacturing jobs in emerging economies? Where does it come from?…

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