Wednesday, January 9, 2013

Learning to Compete: Is Small Beautiful? Small Enterprise, Aid and Employment in Africa | Brookings Institution

Learning to Compete: Is Small Beautiful? Small Enterprise, Aid and Employment in Africa | Brookings Institution

This paper makes the very important point that donors are financing SMEs as it is an "identificable problem" and "money is the solution".

However, as the authors point out, just because more people are employed in MSMEs, doesn't mean that this is where policies should focus - similar to the point made in the recent WDR on jobs.

Since without other changes that allow MSMEs to expand, aid to MSMEs is potentially simply fuelling the growth of more and more inefficient, uncompetitive, stagnant firms.

The basic conclusion of the authors then is that no, small is not beautiful and better jobs are in larger enterprises.

But how to encourage large-scale investment? Increasing donor interest in engaging with the international private sector may provide something of an answer according to the rationale here....





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