Small manufacturing establishments in developing countries: An empirical analysis

There is considerable literature on the promotion of small and medium establishments (SMEs) in developing countries. Rather little attention has been given to the long-term performance of these in the development process. This paper considers the small literature on the trends in the SMEs' contribution to manufacturing in the long run, and the more recent discussion of the effect of policy on these trends. Using considerably more data than previous studies, the paper concludes that (1) it appears that the importance of SMEs tends to decline in early stages of development (as others have suggested), but that this is reversed as countries reach middle-income status, and (2) several of the generalisations frequently made about the impact of policy variables on SMEs cannot be sustained at the country level.