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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Industrial Structure and Microenterprises in Africa
Author:Fafchamps, MarcelISNI
Periodical:Journal of Developing Areas
Geographic terms:Subsaharan Africa
Subjects:small-scale industry
small enterprises
Development and Technology
Economics and Trade
External links:https://www.jstor.org/stable/4192410
Abstract:Microenterprises (MEs) account for a significant proportion of aggregate employment and output in Third World towns and cities. This is particularly true in sub-Saharan Africa. This paper aims at clarifying the debate around MEs and industrial structure in sub-Saharan Africa by applying insights from the industrial organization literature to the continent. These insights reveal the importance of market niches, transaction costs, and enforcement issues in explaining the existence and survival of MEs. They suggest that the dual industrial structure could be amended by reducing business requirements and red tape, thereby allowing some MEs to become small and medium-sized businesses. They also indicate that many possibilities exist to tap the vitality and cost advantages of MEs through encouragement of subcontracting by traders and consortia of small firms. New empirical research is required on law enforcement, transaction costs, informational issues, returns to size, and network effects among MEs. Notes, ref.