Microenterprise development in a sub-sector context

This article explores the transition which takes place when fully integrated household enterprises increase their specialization by restricting the range of functions performed by the microenterprise. This increase in specialization has often resulted in a rise in productivity and in increasing levels of income.Three cases are described from which this generalization is drawn; the article then compares these cases and other similar ones to see common characteristics of this evolutionary pattern, the conditions necessary for it to happen, and the problems that arise from it. The article then discusses some implications of this pattern of change for the identification of cost-effective means of promoting MSEs.Following this article is a short note by Matthew Gamser, Deputy Director of the GEMINI Project, putting sub-sector analysis in the context of other methods of assisting MSEs, and highlighting its strengths.