When economists hear “development accounting,” they often think of a macroeconomic exercise that decomposes income differences across countries into factors like education, capital, and total factor productivity. However, there is a growing field of research that approaches development from an accounting perspective, emphasizing practical applications in developing countries. The Accounting and Development Forum, organized by accounting professors at leading business schools, aims to integrate accounting insights into development work and encourages interdisciplinary collaboration.
One of the challenges faced by development accountants is explaining why certain questions fall under accounting. Unlike economists, who often venture into unfamiliar domains, accounting researchers focus on areas where they have comparative expertise. This includes examining outcomes and business practices that economists may overlook, highlighting the unique contributions of accounting research to development policy.
A significant area of work is the role of accounting standards, due diligence, and transparency. Researchers are examining how regulations in developed countries—such as labor standards, environmental rules, and conflict-free supply chain requirements—affect businesses in developing economies. For example, audits of small-scale mines in the Democratic Republic of Congo under the Dodd-Frank Act reduced localized violence but did not decrease overall conflict. Other studies, such as experiments in Brazil, show that environmental, social, and governance (ESG) practices influence worker allocation and can improve efficiency in the labor market. Similarly, harmonized international accounting rules in Ghana led banks to restrict lending in informal areas due to documentation challenges.
Another focus is the value of accounting for firms in developing countries. Researchers use willingness-to-pay experiments and field studies to understand how reliable accounting information affects credit allocation and business decisions. In northeast India, wholesalers were more willing to extend credit if they could trust the accuracy of retailers’ financial data. Experiments in Honduras and Uganda are testing the impact of digital accounting tools and mentoring on business decision-making, while studies in Kenya show that access to digital credit improves borrowers’ financial well-being and economic activity.
Accounting research in development has broad relevance for economists. It helps explain constraints on firms and households, informs the design of business training and financial education interventions, and improves measurement of firm performance and income, which are essential for understanding poverty and growth. By integrating accounting expertise with development research, more accurate insights can be generated to guide policy and investment decisions in developing countries.
