(DP 1983-05) An Economic and Social Impact Analysis of Small Industry Promotion

Abstract

Small-scale industry (SI) promotion became a prominent policy instrument in developing countries during the 70s and will probably maintain such prominence in the 80s. In the Philippines a major SI promotion program was initiated in 1974 by the Ministry of Industry. In this paper, an attempt is made to evaluate the impacts of SI promotion on various economic and social development concerns. The results of the analysis seem to lend credence to the policy of fostering small enterprises. Although some of the popular claims about their contribution to development goals may be overstated, there is an indication that public policy support for small industry development in the regions/provinces is worthwhile because it apparently makes a difference with respect to socioeconomic concerns. Intuitively, the promotion cost seems modest although, as with project benefits, it has to be compared with the costs of other government development projects. On the whole, a method that combines quantitative and qualitative survey data for economic and social impact analysis has something to recommend itself. Needless to say, the ways in which the surveys were designed and conducted for this study leave some rooms for improvement. Given the lessons of experience, such improvement should be gained in a next empirical application of the method suggested in this paper.