Constraints to the growth of small firms in Northern Myanmar

This paper uses survey data collected from North Western Myanmar to analyze business activity and determine the most binding constraints to firm growth. While the level of entrepreneurship is very high, most firms earn low income and are small and informal with no employees. The most binding constraints are related to financing and competition. We find that informal credit constrained firms grew 8.4% less in 2008-2010. This lack of credit combined with an apparent aversion to debt, limit investment despite high returns. Returns on investments are about 73% per year, which is within the range found in other developing countries.