Small and medium enterprises, growth, and poverty: cross-country evidence

Thorsten Beck and Ross Levine ()
Authors registered in the RePEc Author Service: Asli Demirguc-Kunt

No 3178, Policy Research Working Paper Series from The World Bank

Abstract: The authors explore the relationship between the relative size of the small and medium enterprise (SME) sector, economic growth, and poverty using a new database on the share of SME labor in the total manufacturing labor force. Using a sample of 76 countries, they find a strong association between the importance of SMEs and GDP per capita growth. This relationship, however, is not robust to controlling for simultaneity bias. So, while a large SME sector is characteristic of successful economies, the data fail to support the hypothesis that SMEs exert a causal impact on growth. Furthermore, the authors find no evidence that SMEs reduce poverty. Finally, they find qualified evidence that the overall business environment facing both large and small firms-as measured by the ease of firm entry and exit, sound property rights, and contract enforcement-influences economic growth.

Keywords: Small Scale Enterprise; Microfinance; Economic Theory&Research; Small and Medium Size Enterprises; Environmental Economics&Policies; Small and Medium Size Enterprises; Governance Indicators; Achieving Shared Growth; Microfinance; Private Participation in Infrastructure (search for similar items in EconPapers)
Date: 2003-12-01
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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