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Microenterprise development in a sub-sector context
01.03.1992
This article explores the transition which takes place when fully integrated household enterprises increase their specialization by restricting the range of functions performed by the microenterprise. This increase in specialization has often resulted in a rise in productivity and in increasing levels of income.Three cases are described from which this generalization is drawn; the article then compares these cases and other similar ones to see common characteristics of this evolutionary pattern, the conditions necessary for it to happen, and the problems that arise from it. The article then discusses some implications of this pattern of change for the identification of cost-effective means of promoting MSEs.Following this article is a short note by Matthew Gamser, Deputy Director of the GEMINI Project, putting sub-sector analysis in the context of other methods of assisting MSEs, and highlighting its strengths. -
The legal, regulatory and tax framework and small enterprises
01.06.1994
Enterprise dynamics have three dimensions: births, survival, and growth. This article argues that the policy environment affects enterprise growth differently in each of these dimensions. The principal problems small firms face at start-up concern access to working capital and to markets. Only in particular localities and sectors have government registration procedures significantly constrained new start-ups. With regard to survival, of those enterprises that closed as business failures, issues of access to credit and inputs were important parts of the explanation. In the case of growth, again, issues of markets and demand, of credit and finance, and access to raw materials and machines were the main problems holding back more rapid expansion. Legal and regulatory reforms must address these constraints if they are to succeed in promoting small enterprise growth.