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A Critique of SME-led Approaches to Economic Development - May 2003

4. Concluding Remarks

This article has criticised standard approaches to SME driven development, with incidence on LDCs. The article has been focused on the issues that are considered at least controversial in the literature about SMEs. It has not tried to emphasise potentially less critical and less controversial issues that are also present in the literature, because the aim of the article was precisely to show what the majority of presentations in the seminar is not going to discuss: what is wrong with the SME approach to development.

The article is not making a case against SMEs and in favour of a different scale of firms. What the article is trying to do is to show that a scale approach is an inadequate way to develop and assess economic analysis and policy making, if discussed outside the political, social, economic and technological structures, pressures and dynamics that form part of specific conditions of development of specific industries and firms. Furthermore, the article also shows that scale has more than one economic meaning, such that the perceptions and the realities of scale may vary significantly, and may have very strong policy implications.

For those, on the left, who think that promotion of SMEs creates a fairer and more democratic capitalism, they should rather look at comparable working conditions, trade union organization, ability to implement (and also oppose) progressive labour legislation. They should, also, try to address not the scale of the firm but the nature of capitalist firms and the political, social and economic processes they are part of. In doing so, they should rather make the labour movement to rise to the challenges of monopolist and international capitalism, rather than surviving around the utopia that "small and national are more democratic". For those on the right who think that SMEs are closer to factor endowment; and on the centre who think that SMEs would address pro-poor growth, be more adequate and avoid the excesses of large corporations, lets only expect that this article has given them some food for thought.

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