Impact Assessment

Impact evaluation findings after one year of the productive and business services activity of the productive development project, El Salvador, Mathematica Policy Research, 2012

    Description
    Funded by the Millennium Challenge Corporation (MCC) and implemented by El Salvador’s Millennium Challenge Account (known as FOMILENIO in Spanish) from 2008 to 2012, the main objective of the Productive Development Project (PDP) was to assist in the development of profitable and sustainable business ventures for poor individuals in El Salvador’s Northern Zone. Over approximately four years, the PDP used nearly $72 million in allocated funds to provide over 13,500 participants with technical and material assistance and create more than 11,000 full-time equivalent jobs. The PDP comprised three activities: Production and Business Services (PBS), Investment Support, and Financial Services. The PBS Activity offered training and technical assistance, in-kind donations, and other business development services to small farmers and business owners. The Investment Support Activity offered investment capital (in the form of long-term loans of over $50,000) for viable business proposals. Lastly, the Financial Services Activity supported two loan guarantee programs targeting micro-, small, and medium enterprises, as well as a small technical assistance program to financial institutions.

    The largest of the PDP’s three activities was the Production and Business Services (PBS) Activity, which provided technical and material assistance to farmers and small-scale producers to support the Northern Zone’s dairy, fruit, horticulture, handicrafts, tourism, forestry, and coffee sectors.

    This evaluation addresses three questions:
    - What impact did FOMILENIO’s offer of PBS assistance have on employment creation and producers’ investment and income?
    - What impact did FOMILENIO’s offer of PBS assistance have on household income?
    - What impact did FOMILENIO’s offer of PBS assistance have on intermediate outcomes, such as production levels, business practice adoption, technology adoption, and product diversification?

    Summary of results
    Analyzing all impact results, the authors find two particularly promising findings. First, the offer of PBS services had a statistically significant and positive impact on employment generation for the handicrafts value chain. In particular, the treatment-on-the-treated estimate of 0.19 full-time equivalent jobs is a promising and substantive finding, as it provides evidence that artisans who participated in training and technical assistance made a substantial investment in additional labor related to handicraft production.

    The second noteworthy finding is that PBS assistance to dairy producers significantly raised these individuals’ productive income. This finding suggests that interventions of this type, particularly in the dairy chain, can generate significant effects on income within a relatively short time period of one year. This result coincides with expectations set by Chemonics and FOMILENIO regarding the timeframe in which benefits of assistance would accrue. However, the concentration of positive impacts in the dairy value chain underscores the importance of sector-specific factors—including market conditions and technical assistance packages—in influencing participants’ productive and economic outcomes