Lucie Gadenne

Production networks matter for firm growth. However, little is known about what shapes firms’ production networks in developing countries. This column explores the role of community networks in West Bengal in firm-to-firm trade between 2010 and 2016. Firms systematically trade more within their caste than they would if trading relationships were randomly chosen, both for firms in large and smaller castes. Being in the same caste doubles the probability that two firms trade and, when they do, increases trade volumes by almost 20%.

A one-off demonetisation led to a shift to electronic payments, which in turn increased tax compliance

While academics and policymakers prefer unconditional cash transfer to the poor, they value in-kind transfers that protect against price fluctuations

Taxes on consumption help governments in developing countries redistribute thanks to the presence of large informal sectors

Taxes affect which domestic suppliers firms choose to trade with in India, leading to less within-country trade and firm growth

The capacity of Brazilian local governments to source tax revenue has a greater impact on education and corruption than external transfers

When local governments in Brazil improve tax collection rather than rely on grants to raise revenues, local officials help citizens, not themselves