Institutions, transaction costs and micro and small enterprise performance in Zimbabwe: is there anything we can learn from the Asian NIC's?

Abstract

In this paper we define a number of key concepts which are central to our understanding of the processes of micro and small enterprise behavior and dynamics, with special attention being paid to highlighting the more common types of transaction costs in the products, credit and labour markets. The definition of these terms culminates into the design of an analytical ( framework which is couched within the transaction and information costs economics micro- theoretic perspective meant to illuminate or explain the processes of micro and small scale enterprise behavior and dynamics. The latter is achieved by establishing conceptually a link between institutions, transaction costs and the processes of micro and small scale enterprise behavior and dynamics. Our next task is to point out at some of the few organizational institutional arrangements that can be designed or adjusted and then utilized to minimize the adverse impacts of these various transaction and information costs on the processes of micro and small enterprise growth and survival in the areas of micro-finance, marketing, skills training and contract enforcement. In some of the latter cases we will be drawing heavily from a few selected examples of such institutions from one of the East Asian NICs that were put into test and found to be effective in overcoming some of these constraints in the products, credit and labour markets. It is also our contention that it is only through the joint concerted efforts of both the government and other private sector groups who are in a position to help in changing positively the nature and form of these transaction and information costs by either adjusting existing institutions so that they can function better or can create new ones to fill in the existing institutional vacuum and therefore can go a long way towards meeting the objective of genuinely empowering the intended beneficiaries.