Policy, Programmes and Priority Biases: A Hidden and Overt Agenda Against Small Scale Enterprises

Lim, C.P. (1994). Policy, Programmes and Priority Biases: A Hidden and Overt Agenda Against Small Scale Enterprises. International Small Business Series (No. 17). Göttingen.

Though it is generally recognized that the small enterprise sector plays multiple beneficial roles in the process of economic growth and development, the author claims that SMEs are still disadvantaged in many Asian countries. Even where no outright discrimination is at stake, there may be an unintentional bias against small enterprises by "neutral" macro-policies. It is the aim of the paper to disclose this "hidden agenda" and give recommendations how to alleviate it.

There are several ways by which well-intentioned policies may have deleterious effects on SMEs. Chee Peng Lim starts with an analysis of various policy measures in favour of small enterprises referring to several Asian examples. These can be harmful to the SME sector, since they tend to reduce competition and structural change thereby diminishing competitiveness. Traditional supply-side support may result in a oversubsidization which impedes self-reliance of the small enterprises. But the author emphasizes that also general policy measures which apply to SMEs as well as LSEs may have a bias towards LSE. In the context, he mentions local policies, e.g. zoning measures, or fiscal, trade, monetary, government regulations and procurement policies on the national level.

The author concludes that the environment for SMEs must not be seen in isolation, rather all existing and new policy measures should be monitored for possible adverse effects on small enterprises. Such a process may have as a result the simplification of tax payments and other procedures, the reduction of paperwork by deregulation or the development of a centralized information system to offset the informational disadvantages of SMEs. Another suggestion of the author is a "council of competitiveness" which may act as a kind of appellate court for disadvantaged small businessmen.

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