The missing middle: firms in developing countries

Role of firm size in development

• Many argue larger firms enable capital-intensive investment, economies of scale, better pay, and global competitiveness; lack of big firms is seen as a binding constraint in some developing countries.
• Others stress productivity over headcount: small, highly productive firms can be more valuable than large, low‑productivity ones; “command economy–like” coordination problems and bureaucracy can make very large firms inefficient.
• Some note sectoral differences: heavy industry favors large scale; software and specialized manufacturing (e.g., German Mittelstand) can thrive at small/medium scale.
• Concern that promoting “big” often means entrenching oligopolies, political capture, and fewer choices for workers and consumers.

Examples of national growth models

• Singapore and South Korea are cited as cases where strong states subsidized and attracted large firms (semiconductors, petrochemicals, GLCs), with high living standards as evidence of success.
• Counterpoints: Singapore’s model relies heavily on foreign firms and is hard to scale to large countries; domestic firm creation there is seen as weak. China’s more recent slowdown and debt problems are used to question “unfettered growth.”
• Greece is mentioned as hard‑working but lacking large-scale industry, limiting its EU competitiveness. Germany’s many productive mid-sized firms are presented as an alternative model.
• One thread proposes Argentina’s current liberalization/deregulation as a live experiment in shrinking the state and regulation to spur growth.

Growth ideology and welfare

• Some criticize “line go up” thinking (GDP and firm growth as the main goal), arguing for sufficiency, sustainability, and equality over maximum growth.
• Defenders of free markets respond that countries embracing markets (US, Japan, Germany, etc.) achieved higher living standards; migration flows are cited as revealed preference.
• Disagreement over metrics: GDP vs GDP per capita vs broader quality‑of‑life; consensus that no single number fully captures welfare.

Antitrust and market power

• Long subthread on Microsoft’s browser bundling: some see it as clear anticompetitive dumping that harmed competition given dial‑up frictions and default bias; others argue Netscape lost mainly due to quality and that consumers benefited from free browsers.
• This is used analogically to discuss how big firms interact with regulation and why politicians favor them.

Labor systems and efficiency

• One branch debates whether slave or coerced labor ever outperforms free labor. Examples from US North/South, West Indies, and penal labor are used to argue free labor economies ultimately outcompete slave systems, though local short‑term efficiencies and mixed systems complicate the picture.

Critiques of the article

• Several readers find the piece vague on mechanisms and policy: it notes a “missing middle” but offers few concrete, corruption‑robust ways to grow productive firms without just empowering entrenched elites or foreign giants.
• Others see it as repackaging basic micro/industrial‑organization insights (firm dynamics, trade liberalization, information technologies) without adequately addressing causality, replication, or confounders.