Publication: Small and Medium Enterprises, Growth, and Poverty : Cross-Country Evidence
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Date
2003-12
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Published
2003-12
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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.
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“Levine, Ross; Beck, Thorsten; Demirgüç-Kunt, Asli. 2003. Small and Medium Enterprises, Growth, and Poverty : Cross-Country Evidence. Policy Research Working Paper;No. 3178. © http://hdl.handle.net/10986/17742 License: CC BY 3.0 IGO.”
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