1. Many developing countries offer small market measured in terms of purchasing power. Thus small scale industries are smaller appropriate since large scale industries will find it difficult to operate economically on the basis of narrow domestic market.
2. Small scale industries have an advantage in employing relatively labour that is having a higher labour intensive production. This is important in developing countries which are labour surplus economies with a higher degree of open and disguised unemployment.
3. Less capital is required to start up small scale industries.
4. Risky new products are best tried out on small scale first.
5. Small scale industries encourage local entrepreneurship which provide a good balance to the high degree of foreign ownership prevalent in many developing countries.
6. Small scale industries may have a direct effect on income distribution by spreading economic purchasing power among a larger number of entrepreneurs.
7. Small scale industries contribute to economic independent since large scale industries require increased dependency on foreign aid.
Dullayo answered the question on July 26, 2018 at 14:07
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