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Small Scale Industries - Essay Example

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Small scale sector has been a dynamics for a nations economic growth affecting rural development, generating employment, ensuring equal distribution of national resources, contributing significantly to the GDP, education and social capital. Knowing the areas which are so deeply influenced by the small scale industries, it just cannot be ignored or undervalued…
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Small Scale Industries
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Download file to see previous pages As an example consider the case of Jordan. The strength of SSI in Jordan was 84% of the total established industries during the period of 1990-1998 which escalated to almost 90% of the total industries during the period of1999-2006 (Hachure cited in Lozi, 2008).Contrary to this , the Mexican experience shows that only 70.000 projects go to the second year from 200,000 started annually. (Bencivenga, V. Bruce, S. and Starr, R. 1995).
Different countries have different ceiling of labor size for an industry to be labeled as small scale. For e. g. 15 workers in Iraq and Ghana, while Egypt, Belgium and Denmark have raised the ceiling for labor not exceeding 50 workers. In contrast , countries such as France and Italy adopted the criterion of 500 workers to distinguish between small-scale and other industries But in Japan and in the United States the total number of workers working in small scale industries was set at 300 in Japan and 1000 workers in the United States(Subramanian 1995).
The globally important sector has not been free from dilemma and troubles in the post-reforms period; whether it is lack of infrastructure, technology or is of credit crunch. The present research is an attempt to analyze national policy decisions and industry initiatives affecting the sector, particularly in the developing nations where these industry have considerable economic importance..

2. Literature Review

2.1 Pre-liberalization factors affecting SSI

In the developing countries, Small scale Industries (SSI) have been pioneer in generating employment. These have greater advantage compared to the large enterprises in manufacturing especially in items that involve a larger share of value added from labor. The SSIs employ not only skilled but semiskilled and even unskilled labor. Manufacturing sector has better prospects in the trade particularly if the product is competitive, durable and upto the standards (Morris and Basant, 2006)). The SSIs were contributing to GDP considerably prior to liberalization also (Table -1) (World Bank, 1986).
Morris and Basant (2006) have critically analyzed some of the areas that have affected growth of SSI in India. These are:
The researchers have found policies based on reservations, duty concessions, directed credit, and government regulation, controls, and extension and such short sighted policies began initially for SSI; the macro- economy favoring policies such as monetary, fiscal, infrastructure and development oriented remained inadequately addressed. The non-affordability of infrastructure by SSIs is a deterrent to their expansion and survival in this liberalization period. SSIs have capacity to grow upward provided given impetus

Table -1.

The Japanese experiment has shown the way as to how the traditional industries, producing a wide variety of consumer products, could evolve into small and medium enterprises (SMEs) when these are able to renew technology and do not have financial crunch.

India, of all the developing nations, was at greatest advantage to cash on falling tariffs under General Agreement on Tariffs and Trade (GATT) in textile and many light engineering, handicraft and other manufacturing units. ...Download file to see next pagesRead More
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