Growth constraints on small-scale manufacturing in developing countries: a critical review

The question raised in this review is whether small-scale producers in developing countries can expand or whether they are up against constraints which stunt their growth. Most of the literature has been optimistic on this score; while internal constraints (e.g. lack of managerial ability) or external constraints (e.g. discrimination from government) are identified, expansion is seen as an open-ended process. In other contributions this view has been severely criticized; some allege that the small producers are exploited through various mechanisms, others suggest that their road to expansion is blocked as a result of factors such as the pre-existence of very advanced technology, the control of large firms over product markets, or difficulties in access to raw materials. In discussing the arguments put forward in the debate, an attempt is made to assess their theoretical bases and examine the extent to which they are supported empirically. While most studies express explicitly or implicitly a definite view on the growth potential of small producers, such judgement is rarely based on a comprehensive examination of the context which determines this potential.