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Small Industry in Underdeveloped Countries

Published online by Cambridge University Press:  03 February 2011

Bert F. Hoselitz
Bert F. Hoselitz
Affiliation:
University of Chicago
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Extract

In historical studies of industrialization prominent attention is usually given to the development of large-scale industry and whenever small industry is considered at all, it is usually introduced only as the starting point of, or a contrast to, large industrial enterprises. This concern with large industry also predominated in the earliest post-war discussions on the economic development of underdeveloped countries and from this period stem the famous and often ridiculed schemes of giant steel plants and other large industrial establishments in littleadvanced countries. During the last few years, however, the general climate of opinion has changed and increasing attention has been paid to small scale and even cottage industries. This has been especially pronounced in the countries of southern and southeastern Asia and is strongly supported by various studies and conferences of the Economic Commission on Asia and the Far East and other organizations associated with the United Nations operating in this part of the world.

Type
Articles
Information
The Journal of Economic History , Volume 19 , Issue 4 , December 1959 , pp. 600 - 618
Copyright
Copyright © The Economic History Association 1959

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References

1 In classifying industrial enterprises by size various criteria may be used. One is the amount of fixed assets, another the value of annual production and a third the number of employees. Each of these criteria of classification has some advantages and some drawbacks. We have used the number of persons occupied in a firm, since these data are more readily available than others, and since they have already been used as criteria of plant size in earlier debates, e.g., that between Eduard Bernstein and Karl Kautsky on the question of “concentration of capital” under German capitalism; and in that between Alexander Gerschenkron and David Landes on the relative significance of large and small enterprise in early 20th century Germany and France. On these debates see: Bernstein, Eduard, Die Voraussctzungen des Sozialismus und die Aufgaben der Sozialdemokratie (Stuttgart: J. H. W. Dietz Verlag, 1899), pp. 55–61Google Scholar; Kautsky, Karl, Bernstein und das Sozialdemokratische Programm (Stuttgart: J. H. W. Dietz Verlag, 1899), pp. 55–68Google Scholar; Gerschenkron, Alexander, “Social Attitudes, Entrepreneurship and Economic Development,” Explorations in Entrepreneurial History, VI (Oct. 1953), 1–19Google Scholar; Landes, David, “Social Attitudes, Entrepreneurship, and Economic Development: A Comment,” Explorations in Entrepreneurial History, VI (May 1954), 245–72.Google Scholar As becomes clear, especially from the debate between Gerschenkron and Landes, we must count among the “persons employed” in these small firms not merely the hired operatives, but also the owner and his family, members who work in the shop. In this manner we find firms employing only one person, i.e., the owner himself.

2 As can be seen from Table I, the only two countries which do not fall in this class in recent years are Belgium and Sweden. The departure of the Belgian figures, especially the low proportion of persons in dwarf enterprises, can be explained by the fact that Belgian statistics contain only the number of employees and not also those of owners or employers, whose number would be especially important in handicraft enterprises. All enterprises employing only one person, the owner, are excluded from the Belgian total. The same consideration applies to the Swedish figures, and moreover, the Swedish statistics do not include the construction industry, which typically has a relatively large share of minute and small enterprises. There is little doubt that if Belgian and Swedish data were fully comparable with those of other countries, we would find the same approximate distribution of the industrial labor force as in Austria, Norway, Switzerland, or the German Federal Republic.

3 Hoffmann, Walther, Stadien und Typen der Industrialisierung (Jena: Verlag Gustav Fischer, 1931). pp. 134–58.Google Scholar

4 See Germany, Statistisches Bundesamt, Statistisches Jahrbuch für die Bundesrepublik Deutschland, 1958 (Stuttgart: W. Kohlhammer GMBH, 1958), p. 182.Google Scholar

6 See Reubens, Edwin P., “Small-Scale Industry in Japan,” Quarterly Journal of Economics LXI (Aug. 1947) 601Google Scholar; Kyokai, Asia, The Smaller Industry in Japan (Tokyo: Asia Kyokai, 1957),.Google Scholarpassim.

6 Economic Planning Board, “Statistical Analysis of Medium and Small Enterprises in Japan,” Asian Affairs, II (June 1957), 207.Google Scholar

7 See Pelzel, John, “The Small Industrialist in Japan,” Explorations in Entrepreneurial History, VII (Dec. 1954), 79–93Google Scholar; Bennett, John W., “Economic Aspects of a Boss-Henchman System in the Japanese Forestry Industry,” Economic Development and Cultural Change, VII (Oct. 1958), 13–30.CrossRefGoogle Scholar

8 See Fujita, Keizo, “Management Structure of Small and Medium Enterprises,” Asian Affairs, II (June 1957). 127–28.Google Scholar

9 See Minoguchi, Tokijiro, “Productivity and Wage Problem of Japan's Medium and Small Manufacturing Enterprises,” Asian Affairs, II (June 1957), 147–8.Google Scholar Minoguchi also describes a similar situation for the sewing machine industry on p. 148.

10 See also Hatton, Charles S., The Position of Small Industry in Japan, cited in Henry Rosovsky, Japanese Capital Formation 1868–1940, unpublished doctoral dissertion, Harvard University, 1959, p. 349.Google Scholar

11 See Hoselitz, Bert F., “Population Pressure, Industrialization and Social Mobility,” Population Studies, XI (Nov. 1957), 131–3.Google Scholar

12 See Kuznets, Simon, “Quantitative Aspects of the Economic Growth of Nations: II, Industrial Distribution of National Product and Labor Force,” Economic Development and Cultural Change, V (July 1957), Suppl. 32 ff.Google Scholar The method employed in Kuznets’ computations and the limitations of raw data, as well as the possible errors and degree of confidence one may attribute to the statistical findings are presented on pp. 33–4.

13 Kuznets, “Quantitative Aspects,” p. 97.

14 Dhar, P. N., Small-Scale Industries in Delhi (Bombay: Asia Publishing House, 1958).Google Scholar

15 Dhar, Small-Scale Industries, pp. 77–81.

16 The ratios for Japan and Norway have been computed from the same sources used for the construction of Table 2.

17 See Witt, Henry, Die Triebkräfte des industriellen Unternehmertums vor 100 Jahren und heute, unpublished dissertation, University of Hamburg, 1929, pp. 13–5.Google Scholar

18 Alec P. Alexander, “Industrial Entrepreneurship in Turkey: Origins and Growth,” (mimeographed paper, distributed by the author), p. 5.

19 Berna, James J., S. J., “Patterns of Entrepreneurship in South India,” Economic Development and Cultural Change, VII (Apr. 1959), 348–53.Google Scholar

20 McCrory, James T., Small Industry in a North Indian Town (Delhi: Government of India Press, 1956), pp. 6–9.Google Scholar

21 McCrory, Small Industry, pp. 53–67.

22 Mills, Arthur E., Private Enterprise in Lebanon, unpublished dissertation, University of London, 1958, pp. 97–992.Google Scholar

23 See Dey, Sushil Kumar, Industrial Development: A New Approach (Calcutta: Thacker Spink & Co., 1955).Google Scholar Mr. Dey's scheme received a good deal of attention by Indian and British economists, notably Joan Robinson, who suggested that it be supplemented by an organization like the E. P. U. The debate concerning Dey's proposal hag been summarized in a paper by Suresh Prasad Niyogi, “A Study of the West Bengal Village Exchange Scheme,” in Indian Economic Association, Papers Read at the 39th Annual Conference of the Indian Economic Association, Cuttack: Indian Economic Association, 1956, pp. 275–282.