Growth, investment and trade are the outcomes of the processes by which people with ideas start firms. But where does the productive capacity of firms come from? What are the barriers that prevent resources to flow to the firms with the greatest potential? Why is it that not all people that...

I develop a method to measure and separate the production misallocation caused by failures in factor markets versus financial markets. When I apply the method to rice farming villages in Thailand I find surprisingly little misallocation. Optimal reallocation would increase output in most...