ABSTRACT
This chapter summarizes the rationale for government intervention in the development of small enterprise. It discusses the role of the public sector in the light of the limitations of an interventionist approach to small enterprise development. In so doing, it is intended to identify small enterprise development issues in the UK that are relevant to the developing world. The legitimacy of intervention by the public sector in assisting small enterprise is, however, a derivative of the more general case that intervention may be warranted where the market either fails to operate perfectly or operates perfectly but with undesirable consequences. Public sector support for the development of small enterprise is based on its special contribution to economic and social welfare. A more market-oriented approach by the public sector is called for by many observers, yet there remains a need for public sector intervention to provide resources directly where this can be done efficiently and at low-cost.
