‘Barriers’ to the growth of informal sector firms: A case study

Between 1960 and 1974, in the Punjab, Pakistan, many artisan units entered the production of small capacity tubewells. However, having reached a certain stage, even the largest and the most enterprising of these firms were unable to expand any further. This study, seeks to identify the factors that prevented their further growth. The article directs attention to the inability of the informal enterprise to adopt techniques that are essential for growth beyond a certain stage. The main source of this weakness lies in the fact that many of the skills associated with the use of these techniques are necessarily acquired through formal educational and training channels. The inability to expand beyond a certain stage is, therefore, identified with the inability to cross over into the modern sector. The barrier’ lies in the social and economic background of the informal firm's owner‐manager which limits his capacity to absorb and attract through the market skills and resources needed to adopt the necessary techni...