Abstract

Development of small-scale industry in emerging economies is almost always assigned high priority. Despite lofty objectives, results are often disappointing and the potential contributions that vigorous small scale industry could make to development programs are not realized. This article seeks to identify the causes of failure and to provide recommendations for their correction. There are several basic reasons for unfavorable results of many small scale industry programs. They parallel the weaknesses of more general development planning. Fundamentally, either the necessary planning is not performed, development authorities underestimate the implementation requirements, or both. Manifestation of inadequate planning and implementation of programs is reflected in a number of problem areas. Goals of industrialization plans may be inconsistent with motivations internal to industry. These differences lead planners to misjudge industry's response to incentives. The heterogeneity of small scale industry requires correspondingly individualized mechanisms for successful activation of programs. Constraints of knowledge, skills and communication, a limited market and gaps in available physical resources for success are often not adequately considered.