Macro-policies for small-scale industry and Appropriate Technology

Frances Stewart

Macro-policies are those that concern aggregates in the economy, like the level of taxation, public expenditure, money supply, or exchange rate, while meso-policies are those that concern the distributional consequences of any given macro-policies, e.g. the sectoral distribution of
public expenditure or the tax rates on different types of activity. The macro- and meso-policy environment is of critical importance in determining technology choice and technology change. Yet most efforts to promote small-scale enterprises and Appropriate Technology (AT) have been concentrated
at the micro-level, in industrial estates supporting small enterprises and in projects to develop ATs. Despite a wide range of interventions, including, for example, boat-building, mini-cement plants and solar energy (see Carr (ed.), 1986), for a survey of a number of AT interventions), the
effects have been confined mainly to a small number of firms and to particular areas. ATs have rarely been disseminated widely and in most countries the small-scale sector has not been a dynamic source of output growth. The main responsibility for this lies in a generally hostile policy environment,
the negative effects of this environment outweighing the positive effects of special schemes to support the small scale sector. This paper explores how the macro- and meso-policy environment has impinged on the small-scale sector and on technology choices. It then considers whether small-scale
technologies are efficient, and goes on to discuss how the policy environment affects technology decisions, surveying evidence on ways in which policies have discriminated against AT and small-scale production in a large number of areas. In the light of these findings, a summary of the macro-
and meso-policies identified as favouring the small-scale sector and AT is presented.