Small-Scale Industry Development
The European Union
There appears to be a "small-scale industry renaissance" in recent academic and policy literature on industrialization and development. It is increasingly recognized that the mass production economy is in deep trouble—that large-scale industry does not "deliver" anymore, neither as the engine of growth nor as the provider of employment, in spite of substantial and consistent support in the form of financial and tax incentives as well as direct subsidies. At the same time, academic and policy attention is drawn to some prosperous and highly competitive regions, organized along principles other than those prevailing in the mass production paradigm and where small, flexible, responsive, and innovative firms play a central role.
In the face of the adversities facing mass production industries, and the successful performance of what came to be called "the flexible specialization regions, " a wind of optimism concerning the role of small firms is blowing away numerous conventional arguments on backwardness and inefficiency. The body of ideas associated with the flexible specialization approach, in particular, views small firms as both offering, the magical key for overcoming the present crisis and providing the passport for long-term viable development.
Optimistic theorizations emphasizing the important role of small-scale industry are nothing new in the economic literature. There are numerous "historical precedents" with two centuries of history. 1 From Proudhon to the Russian Populists, to the search for appropriate technology, and finally to the informal sector debate, the chain of intellectual tradition is rich and multifaceted. However, the recent debate on the strengths and weaknesses of small enterprises suffers from a number of problematic aspects, mainly due to lack of clarity in