Financing Firm Growth
Well-functioning capital markets can foster economic growth and allocate resources efficiently. Firms can tap into a broader funding base by issuing debt and equity in capital markets, often at cheaper rates and longer tenors than through other sources of external finance, such as banks. However, capital markets in low- and middle-income countries have lagged those in high-income countries. Accordingly, the firms in those countries have more often relied on bank financing or retained earnings to fund investment and expansion, and they have experienced greater financial constraints than their counterparts in high-income countries. Financing Firm Growth: The Role of Capital Markets in Low- and Middle-Income Countries shows that the gap in capital market financing between low- and middle-income countries and high-income countries has narrowed, with resulting benefits for both the firms accessing those markets and for the countries in which they operate. The analysis reveals greater participation by firms from low- and middle-income countries in capital markets since the 2000s. Most of these firms are new participants in capital markets, and they tend to be smaller, younger, and more productive than those already participating. Firms are deploying capital raised in markets to become more productive--investing in physical assets, hiring more workers, and expanding operations, spurring growth both at the firm level and within their economies. To reach these findings, the analysis used a novel database of the universe of bond and equity issuances from companies between 1990 and 2022. The insights leverage data from nearly 80,000 firms worldwide, focusing on how 20,000 firms across 106 low- and middle-income countries access and use capital market financing. ... "Financing Firm Growth is a groundbreaking exploration that delves into the vital role that capital markets play in driving business expansion in low- and middle-income countries. Backed by data from 80,000 firms across 147 economies, the authors explore the factors underlying capital market growth and its benefits for economies and firms at all levels of development. This book is a must-read for investors, policy makers, and economists shaping the future of global finance." -- Laura Alfaro, Warren Alpert Professor of Business Administration, Harvard Business School
Marketcrafters
A revelatory and unexpected history of the rise of American capitalism--and an argument that entrepreneurial leaders in government, not the mythical "free market," created the most dynamic economy the world has ever known. For many decades, a sacred myth has ruled the minds of policymakers and business leaders: free markets, untouched by the soiled hands of government, bring us prosperity and stability. But it's wrong. American policy makers, on the right and the left, have spent much of the past century actively shaping our markets for social and political goals. Their work behind the scenes and out of the headlines has served as a kind of "marketcraft," resembling the statecraft of international relations. Economist and writer Chris Hughes takes us on a journey through the modern history of American capitalism, relating the captivating stories of the most effective marketcrafters and the ones who bungled the job. He reveals how both Republicans and Democrats have consistently attempted to organize markets for social and political reasons, like avoiding gasoline shortages, reducing inflation, fostering the American aviation and semiconductor industries, fighting climate change, and supporting financial innovation. In recent decades, the art of marketcraft has been lost to history, replaced by the myth that markets work best when they are unfettered and free. Hughes argues that by rediscovering the triumphs and failures of past marketcrafters, we can shape future markets, such as those in artificial intelligence and clean power production, to be innovative, stable, and inclusive. Groundbreaking, timely, and illuminating, this is a must-read for anyone interested in economic policy, financial markets, and the future of the American economy.
