This paper focuses on two questions: why small-scale rather than largescale industries, and what policies and measures have been advocated and used to help develop small-scale industry and with what success? We shall conclude that the case for small-scale industry is substantial, but not as overwhelming as is sometimes supposed. and that where small-scale production has clear advantages, the way to further it is not necessarily through special projects or policies which have that object in mind. A development strategy which encourages small-scale agriculture, and macroeconomic policies that are neutral to the scale of industrial production are at least as important, and in many cases more so. than direct intervention in favour of small-scale producers. Some very popular measures of direct intervention are misconceived.Before addressing these questions, we briefly rehearse changes in attitudes towards industrialisation since World War 11. We also attempt to define and assess the importance of small-scale industry in LDC's. The paper draws most of its examples from the Informal Sector, because that is where most small-scale industry is, certainly in Africa.
THE HISTORICAL PERSPECTIVEMany LDC's have in the past favoured a strategy of development based on capital intensive large-scale industries. Industry was given preference over agriculture and some countries wanted especially to promote heavy basic industries including steel, cement and heavy engineering. The preference had diverse origins:-the writings of some of the 'pioneers' of development economicsespecially Rosenstein-Rodan and Mandelbaum (Martin) (see Meier and Seers, 1984); a widespread belief that this is what theSoviet Union * Walter Elkan IS prolessor ofeconomlcs at Brunel University. This article wasoriginally written as a Background Paper for the World Bank's 1987 W ( J~[ / L ) c v c 4 p t i m r Reporr. The author received invaluable helpboth with regard to the argument and t o presentation Iron1 ~~~i~ Anderson, Martin Cave.Cyril Ehrlich and Alasdair McBean. and is most grateful to them. as 10 Sheila Forbes and Chris Newnham who typed successive drafts.