ABSTRACT
Perspectives on development that rely heavily on a marketist strategy often argue in favor of small enterprises, especially in the context of developing countries — although for altogether different reasons. It derives from the standard neoliberal proposition that lifting barriers to trade and factor movements would result in a new international division of labor where labor intensive industries, mostly in the informal sector, and more precisely the dynamic small enterprises, would have a significant role in the growth process of developing economies. According to the comparative static Heckscher—Ohlin model, trade liberalization promotes labor intensive activities in developing countries, where labor is in relative abundance. Further, investment liberalization makes inflows of technology, information and skills easier. As a result, liberalized regimes help to rationalize activities across boundaries, leading to the efficient allocation of mobile resources and increased competitiveness of local enterprises.
