Small Scale Industries

Topics: Economics, Investment, Capital accumulation Pages: 14 (5240 words) Published: December 8, 2010
Small-Scale Industries in the Globalization Era: The case of Jordan Basem M. Lozi, Assistance Professor, Al-Balqa Applied University, Abstract The research examines the role of SSI in the economic development of Jordan by showing the effects of the SSI on the unemployment rate, production, and sales. The research concludes with policy recommendations to ensure the sustained and competitive growth of small-scale industries in Jordan. The results of the study show that the growth of SSI in Jordan in terms of employment, production and sales has increased due to globalization and domestic liberalization. However, it is still not as significant as planned. The SSI sector should be encouraged to make a sustainable contribution to the national income, employment, and exports. Keywords: Small scale industries, policy, globalization, Jordan, competitiveness. Introduction The development of small-scale industries (SSI) has been one of the major planks of Jordan’s economic development strategy since Jordan's independence. The SSI sector occupies a place of strategic importance in the Jordanian economic structure due to its considerable contributions in terms of output, exports and employment. SSI play a key role in the industrialization and development of any country. This is because SSI provides an immediate large scale employment, ensure a more equitable distribution of national income, and facilitate an effective mobilization of resources, capital, and skills which might otherwise remain underutilized. It is possible to determine the concept of the SSI in accordance with two measures: the size of the labor force employed; and the amount of invested capital in this industry. Jordan has adopted the first concept to distinguish between the SSI and other industries. An establishment is considered small if it employs not more than 10 workers, while industry employing between 15-30 workers is considered a medium scale industries, and when having more than 30 workers the industry is considered large scale industry's category. Although many countries have adopted this criterion, other, countries determined the higher ceiling of the number of the labor in this industry to become 15 workers as it is in Iraq and Ghana, while Egypt, Belgium and Denmark adopted the criterion that the number of workers should not exceed 50 workers. In contrast , countries such as France and Italy adopted the criterion of 500 workers to distinguish between small-scale and other industries But in Japan and in the United States the total number of workers working in small scale industries was set at 300 in Japan and 1000 workers in the United States(Subramanian 1995). Furthermore , the SSI are characterized by their degree of spread as show in table (2), the SSI in Jordan comprise nearly 84% of the established industries during the period of 19901998 and increased to nearly 90% of the total industries established during the period of 1999-2006 (Hachure 2004). Moreover, most of these industries were characterized as being environmentally friendly. The possibility of establishing these industries in different regions is favorable because they do not need a special infrastructure, once these industries are well established then the encouragement of their spread in the rural regions will help to achieve many of the social and economic goals, such as increasing income in rural areas, controlling the migration from rural areas to cities and controlling demographic growth. Objectives of the study The main objective of this paper is to highlight the importance of SSI in the Jordanian economy as SSI occupies a place of strategic importance in the Jordanian economy due to their considerable contributions in terms of production, sales and employment. These


contributions have emerged despite of the fact that this sector has been exposed to intensifying competition. Research Questions This paper is also attempting to answer the following research...
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