ABSTRACT
This chapter discusses some of the theoretical issues surrounding the selection of appropriate economic efficiency measures for small-scale enterprises (SSEs). It introduces a range of issues labelled as 'risk, diversification and livelihoods' which affect analysis of SSEs considerably more than medium- and large-scale enterprises. The sugar industry case study reveals that apart from the factors internal to the SSE production systems, it is also necessary to take account of other elements of efficient resource use relating to 'upstream' and 'downstream' elements. Discussion of the efficiency of SSEs has often failed to accommodate the fact that economic opportunity costs may significantly differ between the environment within which SSEs operate and the equivalent environment within which Large Scale Enterprises/Medium Scale Enterprises operate. Small-scale industries are usually discussed in the context of manufacturing, but 'industry' per se includes construction, energy generation and distribution, water and sanitation.
