Policy Supports for Small and Medium Enterprises in Developing Countries: Rationale and Practice

In the development studies literature, there are, among others, three distinct analytical approaches which are concerned explicitly with the position of small and medium enterprises (SMEs) in developing economies. These approaches are The Dualist Approach, Petty Commodity Production (PCP) Approach, and Flexible Specialisation (FS) Approach. The theoretical arguments underlying these approaches are marked by differing conceptual frameworks and discussed differently in terms of development prospects of SMEs in promoting the development of SMEs in developing countries. After the mid-1970s, the dualist approach received vigorous criticism which resulted in utilising an alternative perspective that evolved within the Marxian-based concept of “PCP” and its inter-linkages with the capitalist mode of production. From the late 1980s, there has been discussion on the applicability of a new approach known as “FS” in an attempt to describe the existing position of SMEs in developing country.