One of the issues which has struck me over and over again, is the lack of management training in the civil service in developing countries - or in the African countries where I've had experience anyway (admittedly not a huge sample!). That lack of training seems to extend to the private sector, where companies rarely use the services of management consultants. While that may seem normal in an underdeveloped economy, where the priorities are presumably trying to keep costs down in an already costly environment to operate in, one of the big things which comes out of enterprise surveys on Sub-Saharan African firms is their low levels of productivity.
There could be any number of reasons for this, and one which is often invoked in regression analyses of firms is the education level of the firm manager, where this is intended to proxy for productivity in general. However, the measure employed is generally the years in school of the highest level of education achieved. While entrepreneurial ability is clearly not only related to years in school, this may indeed serve as a pretty rough guage of the manager's enterpreneurial ability, especially when taken along with years in business. But differences in education relate more to productivity differences across firms rather than the absolute levels in productviity, which are also low in general.
Following my participaiton in an enterprise survey in Mozambique, it had crossed my mind that management consultants and their importance in an economy might well relate to the aggregate productivity or growth rate of an economy. However, I never got passed thinking about how you would treat that in a regression since there would be a clear issue of identification to be cleared up - is there more management consultancy because of higher growth or the other way round?
However, as recently pointed out by Chris Blattman, a number of experiments have been carried out at the firm level on precisely this issue - providing consultancy services to a randomly sampled group of firms, to compare outcomes with a control group of firms. And the results are quite interesting.
Bloom et al. find that Indian firms were indeed lacking in management guidance with issues as simple as the organisation and clutter of the factory floor apparently lowering productivity.
If this is the case, what is the role for industrial policy? To subsidise management consultants instead of paying for yet more international consultants and reports?