ABSTRACT
One severe limitation to government cures is that small- and medium-scale industries (SMI) entrepreneurs lack innovativeness. Designing an appropriate framework in which economically viable SMIs can flourish rather than intervening in the functioning of enterprises or markets should be the general guideline of any SMI promotion policy. According to the school of thought, an appropriate reorientation of general industrialization policies would be sufficient to activate the development potential of SMIs. Demand for investment finance and for services or infrastructure suited to non-traditional SMIs is relatively low when demand for the products of enterprises is adversely affected by economic policies. Financial liberalization would be expected to enhance the development of financial markets. SMIs would be able to benefit from both better performance of financial institutions and from a higher competition among financial institutions. The design of specific measures to support structural adjustment in the SMI sector must be based on an understanding of what such measures are to achieve.
