Does Business Climate Have Effect on Total Factor Productivity of Agro-Allied Small and Medium Enterprises in Nigeria: An Empirical Review

The existence as well as continuity of any business including small and medium enterprises (SMEs) is premised upon its business climate. Studies have been carried out on the effect of investment/business climate on SMEs, however, there is dearth of literature on whether or not investment/business climate has profound effect on total factor productivity of Agro-allied small and medium enterprises in developing countries. The study underscores the importance of exploring the relationship between the business climate and total factor productivity in small and medium-scale Agro-allied industries by reviewing relevant empirical literature in developing countries. The study adopted a review approach which dealt with theoretical review (flexible specialization theory), conceptual review which encompasses the concept of agro-allied SMEs, business climate and its importance as well as state of investment in Nigeria. Concept of productivity which entails factors affecting productivity of agro-allied SMEs in Nigeria and factors affecting TFP in relation to business climate were also reviewed. Review of relevant empirical studies and possible challenges were also captured in the study. The study concludes that business climate has influence on TFP. Conducive business climate in Nigerian agro-allied SMEs is hereby advocated for.