ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Policy Prescriptions for Small and Medium Enterprises

Policy Prescriptions for Small and Medium Enterprises

Policy Guidebook for SME Development in Asia and the Pacific by Masato Abe, Michael Troilo, J S Juneja and Sailendra Narain (Bangkok: ESCAP), 2012; pp xviii + 223, $80.

While orthodox growth theory simply assumes that growth will take care of distribution, it has proved otherwise in the new century. As rightly noted by reports of the International Labour Organisation, growth has become increasingly a story of growing inequality across the globe. Hence, the conceptualisation of “inclusive growth”. Economic theory, from time to time, has looked into the role of key agents of distribution in the economy. An equalising distribution cannot take place unless the relevant agents are constantly at work within the economy. Thus the focus on small and medium enterprises (SMEs), whose perceived role, traditionally, has been distributive. SMEs are viewed as the best agents of decentralised growth and growth spillovers in any economy.

Despite such a strategic role, the practice of SME development in most countries of the world remains largely ad hoc and not integrated with the mainstream models of economic growth which continue to guide economic policy in these countries. While during normal times ad hocism holds sway, the role of SMEs comes to be actively debated during an economic crisis. Thus, after the 2008 economic crisis, most parts of the world have ushered in a plethora of official SME-development strategies including tax relief, new incentives and several welfare measures for the entrepreneurs. The implicit message is that SMEs are key instruments for reducing the pain of the crisis, though the crisis-averting role of the SMEs has not been adequately recognised by policymakers. The book under review discusses the extent to which micro, small and medium enterprises (MSMEs) can be central in private sector development policy in Asian countries.

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