ABSTRACT
The observed differences in relative economic efficiency among countries indicate that small- and medium-scale industries (SMI) can play an important role in industrial development, even at advanced levels of industrialization such as in Singapore. Concerning domestic markets for final products, potential growth of the SMI sector depends on demand expansion and on consumers' preferences. Under conditions expansion of demand for consumer goods produced by SMIs depends largely on income growth within relevant groups of consumers and on income elasticities. Concerning the export potential of SMIs, a relevant point is the extent to which SMIs can become competitive in world markets. There is empirical evidence that such a potential was successfully exploited in many Association of South East Asian Nations (ASEAN) countries. Differences in the performance of SMIs among ASEAN countries suggest that the economic environment including policies has an important role to play in deciding whether SMIs are victims or agents of economic development.
