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In Africa's least developed countries (LDCs), escape from poverty and convergence to living standards of more advanced economies depends critically on structural transformation and the emergence of productive entrepreneurship that would accelerate growth and job creation. So far, however, subsistence agriculture has been the main source of employment in these countries, while a dynamic private sector in industry or high value-added services has remained elusive. Utilizing the flow approach to labor markets, this paper complements the empirical literature and numerous surveys on small and medium enterprise (SME) constraints and develops a theoretical framework that examines the main obstacles to entrepreneurship in Africa's LDCs. The paper posits that given the persistent frictions in product and labor markets as well as skill shortages that characterize these economies, development of productive entrepreneurship cannot be left to markets alone. The policy analysis suggests that the state has an important role to play. Well-targeted government interventions including training of potential entrepreneurs and workers can help to establish more modern and highly productive SME clusters that Africa's LDCs need. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of technical and allocative efficiency of micro-enterprises in the Nigerian economy, using cross-sectional data collected on 180 micro-enterprises selected from block-making, metal fabricating and sawmilling enterprises. The Nigerian government has put in efforts at promoting productivity and efficiency in both the public and private sector of the economy. As a developing country, Nigeria has immense potential for better economic growth, both in the short and long run. It then becomes important to know the current level of efficiency within the sector. Quantitative estimates obtained from the stochastic frontier production function indicated a wide variation, in technical and allocative efficiencies within and across occupational groups and across operational scale. The wide variation in the level of efficiency is an indication that there is ample opportunity for these enterprises to raise their level of efficiency. While the level of education of enterprise owners was found to be highly significant in affecting the level of efficiency of the micro-enterprises, the age of enterprise owners was round to be negatively related to their level of efficiency. These variables are important factors that government policy should address so as to improve the current level of efficiency in the sector. [ABSTRACT FROM AUTHOR]