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Technical Efficiency Of Small And Medium Scale Industries (Smi) In Nigeria: Evidence From Nation-Wide Sample Survey

Listed author(s):

    (West African Monetary Institute (WAMI), Accra, Ghana)


    (Special Assistant to the Deputy Governor, Central Bank of Nigeria)

Registered author(s):

    Development economists over the years have solicited the use of small and medium industries (SMI) to accelerate the pace of industrialization and economic growth, particularly in developing economies. In recognition of this, entrepreneurship education and the promotion of entrepreneur spirit have received significant attention in Nigeria. This is evident through the deep involvement of government and Non-Governmental Organizations in recent times in the promotion and financing of SMI. In spite of all these efforts, the contribution of the SMI sector to economic growth has been miniscule, while the productivity of the sector has also not been commensurate with the incentives packages. This is essentially because the sector lacks knowledge of modern management techniques and technological capabilities. As postulated in the endogenous growth theory, factor accumulation is not enough to engender growth. Efficiency is a key driver of growth as it enables entrepreneurs to derive more output from a given input. This study lays emphasizes on the role of technological capabilities as an important catalyst for the development of SMI and technical efficiency as a major driver of capabilities. An assessment of technical efficiency in this way is necessary because, how technical efficiency contributes to enterprise productivity is a prerequisite to assessing the need for any kind of support for its development. The study utilizes quantitative information gathered from field survey to compute productivity and efficiency indicators. The study also identifies lingering constraints to SMI development. Overall, the findings from this research draw attention to the need for the development of local technology to support and stimulate indigenous entrepreneurship of SMI.

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    File Function: Revised version, 2007
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    Article provided by Babes-Bolyai University, Faculty of Business in its journal JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA.

    Volume (Year): (2007)
    Issue (Month): ()

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    Handle: RePEc:bbn:journl:2007_2_3_essien
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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-717, August.
    3. Pissarides, Francesca & Singer, Miroslav & Svejnar, Jan, 2003. "Objectives and constraints of entrepreneurs: evidence from small and medium size enterprises in Russia and Bulgaria," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 503-531, September.
    4. Bagachwa, M. S. D., 1992. "Choice of technology in small and large firms: Grain milling in Tanzania," World Development, Elsevier, vol. 20(1), pages 97-107, January.
    5. Mercedes Gumbau-Albert & Joaquin Maudos, 2002. "The determinants of efficiency: the case of the Spanish industry," Applied Economics, Taylor & Francis Journals, vol. 34(15), pages 1941-1948.
    6. Adei, Stephen, 1990. "Technological capacity and aborted industrialization in Ghana: The case of Bonsa Tyre Company," World Development, Elsevier, vol. 18(11), pages 1501-1511, November.
    7. Rangan, Nanda & Grabowski, Richard & Aly, Hassan Y. & Pasurka, Carl, 1988. "The technical efficiency of US banks," Economics Letters, Elsevier, vol. 28(2), pages 169-175.
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