CONTENT OF PROPOSAL
Background OF PRoposal
Question and Objective
Methods Of analysis
SCope. And limitation
Plan of study
AWE JUMOKE BOLANLE
Research proposal. On
FINANCING SMALL AND MEDIUM SCALE. INDUSTRIES IN NIGERIA
PROJECT TOPIC : FINANCING STRATEGIES FOR SMALL AND MEDIUM SCALE INDUSTRIES IN NIGERIA
Interest in the role of small and medium-sized enterprises (SMEs) in the development process continues to be in the forefront of policy debates in developing countries. The advantages claimed for SMEs are various, including: the encouragement of entrepreneurship; the greater likelihood that SMEs will utilise labour intensive technologies and thus have an immediate impact on employment generation; they can usually be established rapidly and put into operation to produce quick returns. SME development can encourage the process of both inter- and intra-regional decentralisation; and, they may well become a countervailing force against the economic power of larger enterprises. More generally the development of SMEs is seen as accelerating the achievement of wider economic and socio-economic objectives, including poverty alleviation.
Staley and Morse (1965) identify a ‘developmental approach’ to SME promotion which has as its objective the creation of ‘economically viable enterprises which can stand on their own feet without perpetual subsidy and can make a positive contribution to the growth of real income and therefore to better living levels’. This approach emphasises the importance of efficiency in new SMEs. Small producers must be encouraged to adopt new methods, move into new lines of production and in the long-run, wherever feasible, they should be encouraged to become medium- or even large-scale producers.
More recent concerns associated with the growth and efficiency of smaller enterprises has also become prominent. Using the case of Northern Italy, Piore and Sabel (1984) have argued that small enterprises are more efficient because they have adopted a flexible specialisation approach. Correspondingly, there has been growing interest in whether this model has or can be replicated in developing countries (Schmitz, 1989; Pederson, 1994; Schmitz and Musyck, 1994; Schmitz, 1995).
The role of finance has been viewed as a critical element for the development of small and medium-sized enterprises. Previous studies have highlighted the limited access to financial resources available to smaller enterprises compared to larger organisations and the consequences for their growth and development (Levy, 1993). Typically, smaller enterprises face higher transactions costs than larger enterprises in obtaining credit. Insufficient funding has been the major problem confronting SMEs (Peel and Wilson, 1996). Poor management and accounting practices have hampered the ability of smaller enterprises to raise finance. Information asymmetries associated with lending to small-scale borrowers have restricted the flow of finance to smaller enterprises. In spite of these claims however, some studies show a large number of small enterprises fail because of non-financial reasons (Liedholm, McPherson and Chuta, 1994).
The panacea for solving problems of economic growth in developing countries often reside in the development of small scale industries. The establishment of those industries has been the centerpiece of industrial development of many countries such as India, Malaysia, Pakistan, Indonesia and Nigeria to mention a few. It is expected that the gains to be derived from the establishment of small-scale industries will be translated into the generation of employment at a low investment cost. These industries will also be able to harness raw materials locally and serve as raw inputs to the large-scale industries.
STATEMENT OF RESEARCH PROBLEM
The growth of output of any economy depends on...
Anderson D (1982) ‘Small Industry in Developing Countries: A Discussion of Issues’, World Development (10), 11, 913-948
Bates J (1971), The Financing of Small Business, London: Sweet and Maxwell
Levy B (1993), “Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment”, The World Bank Economic Review 7 (1), 65-83
Schmitz H and Musyck B (1994) “Industrial Districts in Europe: Policy Lessons for Developing Countries?”, World Development, 22 (6), 889-910
Staley E and Morse R (1965), Modern Small-Scale Industry for Developing Countries, McGraw-Hill
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