What do we now know about the effectiveness of business training, and how can it be done better? A re-assessment of the evidence

Despite its popularity among policy makers, the use of business training has faced increasing skepticism. This is, in part, fueled by the fact that most of the first wave of randomized experiments in developing countries could not detect statistically significant impacts of training on firms' profits or sales.

This seminar revisits this evidence and incorporates the results of more recent studies. A meta-analysis of these estimates suggests that training increases profits and sales on average by 5 to 10 percent. This is benchmarked against what we know about the impacts of returns to education and capital to discuss whether this is reasonable value for money. The question then is how we can improve standard business training. Five approaches are considered: incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. Given that training delivers some benefits for firms, the challenge is then how to deliver a quality program on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funneling firms.