1 TRADE PREFERENCES, ECONOMIES OF SCALE AND DYNAMIC PRODUCTIVTIY UPGRADING IN AFRICAN MANUFACTURING FIRMS: THE PRODUCTION TECHNOLOGY – INSTITUTIONAL CONTEXT NEXUS Abdelrasaq Nal Department of Economics, Federal University Dutsin-Ma, Nigeria ABSTRACT Economic justification for the idea that trade preference incentive can, through its enhanced market facility, bring about dynamic productivity gains to beneficiary firms is rooted in the logic of economies of scale. Under the assumption that this scale driven efficiency does not accrue randomly to firms, this paper argues that striking the right kind of complimentarity between attributes of production technology and those of institutional environment is the key to realising it. Precisely, a framework is presented in which a production technology with strong potentials for internal (firm level) economies requires availability of highly skilled and competent professionals in the management of large scale concerns for successful appropriation. On the other hand, if potential for scale economy is revealed to be strong only at external (industry) level, then success in actualizing it would ultimately be determined by the efficiency of socioeconomic support structures that obtains in the wider macro level environment. Empirical support for the claims is demonstrated in the responses of African manufacturing firms to the incentives of African Growth and Opportunity Act Scheme. Keywords: Trade preference; economies of scale; productivity, manufacturing, production technology, institution