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Servicios no financieros y producción a pequeña escala: desafíos y lecciones de política

Jose Tavara ()

No 1996-128, Documentos de Trabajo / Working Papers from Departamento de Economía - Pontificia Universidad Católica del Perú

Abstract: This paper examines the current prospects of small-scale manufacturing firms in Peru. The author argues that their viability depends, among other factors, on their access to various services such as specialized information on markets and technology, technical training and assistance, negotiations and actions to remove obstacles to foreign trade. These firms are facing intense competition with imported goods, which are produced and assembled abroad by firms that do have access to these services. Three modes of organizing the provision of these services are examined, namely market relations, contractual (vertical) relations and collective (horizontal) action. Market provision is limited insofar these services have, in some degree, the attributes of public goods (indivisible and non-excludable). Furthermore, their provision requires interactions in a context of asymmetric information and in some cases involves substantial investments and non-negligible sunk costs. Contractual relations within the vertical chain of activities, on the other hand, appear to be significant in agriculture. Their scope in urban settings is limited, however, due to the lack of production standards and heterogeneous technology, as well as higher transaction costs. Finally, collective action is hindered by the fragmentation and lack of legitimacy of producers' associations, the heterogeneity of social norms and the weakness of the judiciary system. These factors reduce the possibilities of successful negotiation. The limits of these modes of organization provide a rationale for new forms of State intervention, this time in close cooperation with the private sector in order to secure technical competence and financial sustainability.

Pages: 52 pages
Date: 1996
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