Publication: SME Contributions to Employment, Job Creation, and Growth in the Arab World
Loading...
Published
2013-10
ISSN
Date
2014-02-04
Author(s)
Editor(s)
Abstract
Recent economic and political developments have highlighted a challenge shared across the Arab region of generating employment, promoting inclusive growth, and improving competitiveness. In the short run, weakened macroeconomic fundamentals in the developing economies of the Middle East and North Africa are a key challenge. The region's main challenge is to achieve sustainable growth that delivers the quantity and quality of jobs needed. An inclusive and competitive private sector has proven to be one of the most effective and long-term solutions for this challenge. This paper provides an analytical framework to diagnose and identify key challenges to the growth of small and medium enterprises that is supported by a quantitative model based on the World Bank's Enterprise Surveys database. The findings reconfirm that the route to a sustained role for small and medium enterprises in job creation requires improving the credibility of reforms, the effectiveness of policies, and equitable enforcement. Although one size fits all is infeasible for Arab countries, it is important to design policies across sectors to create productive employment and promote economic growth. Supporting innovation and enhancing access to finance are central to the development agenda for small and medium enterprises. And creating an enabling environment and setting up accountable institutions are key to ensure equal opportunity and inclusive growth.
Link to Data Set
Citation
“Nasr, Sahar; Rostom, Ahmed. 2013. SME Contributions to Employment, Job Creation, and Growth in the Arab World. Policy Research Working Paper;No. 6682. © World Bank. http://hdl.handle.net/10986/16897 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication Direct and Indirect Impacts of Transport Mobility on Access to Jobs: Evidence from South Africa(Washington, DC: World Bank, 2025-11-12)Access to jobs is essential for economic growth. In Africa, unemployment rates are notably high. This paper reexamines the relationship between transport mobility and labor market outcomes, with a particular focus on the direct and indirect effects of transport connectivity. As predicted by theory, wages are influenced by the level of commuting deterrence. Generally, higher earnings are associated with longer commute times and/or higher commuting costs. Local accessibility is also important, especially for individuals with time constraints. Both direct and indirect impacts are found to be significant in South Africa, where job accessibility has been challenging since the end of apartheid. For the direct impact, the wage elasticity associated with commuting costs is significant. Returns on commute are particularly high for women. Local accessibility to socioeconomic facilities, such as shops and health services, is also found to have a significant impact, consistent with the concept of mobility of care. To enhance employment, therefore, it is crucial to connect people not only to job locations but also to various socioeconomic points of interest, such as markets and hospitals, in an integrated manner. This integration will enable individuals to spend more time working and commuting longer distances.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication From Policy to Practice: Lessons from the Implementation of the Refugee Work Rights Policy in Ethiopia(Washington, DC: World Bank, 2025-11-10)This paper examines the early implementation of Ethiopia’s refugee work rights policy, with a focus on the issuance of permits that enable refugees to engage in economic activities. Building on significant legal and institutional advances under the 2019 Refugee Proclamation and subsequent directives, the analysis explores how these reforms are being operationalized in practice. Using a mixed-methods approach, combining document review, administrative data analysis, and semi-structured interviews, the paper identifies both progress and remaining challenges. Permit issuance has increased since the adoption of detailed operational guidance in 2024, reflecting the Government of Ethiopia’s commitment to operationalizing its progressive legal framework and ensuring that refugees can exercise their right to work. However, take-up remains modest, with about 5.2 percent of the working-age population holding a permit. Preliminary evidence suggests that coordination gaps, limited subnational capacity, low awareness among refugees and employers, and disincentives to formalize in a largely informal labor market are contributing to the low take-up. The paper offers policy suggestions, grounded in the Ethiopian context and emerging evidence, to help translate legal commitments into improved labor market outcomes for refugees.Publication Monitoring Global Aid Flows: A Novel Approach Using Large Language Models(Washington, DC: World Bank, 2025-11-04)Effective monitoring of development aid is the foundation for assessing the alignment of flows with their intended development objectives. Existing reporting systems, such as the Organisation for Economic Co-operation and Development’s Creditor Reporting System, provide standardized classification of aid activities but have limitations when it comes to capturing new areas like climate change, digitalization, and other cross-cutting themes. This paper proposes a bottom-up, unsupervised machine learning framework that leverages textual descriptions of aid projects to generate highly granular activity clusters. Using the 2021 Creditor Reporting System data set of nearly 400,000 records, the model produces 841 clusters, which are then grouped into 80 subsectors. These clusters reveal 36 emerging aid areas not tracked in the current Creditor Reporting System taxonomy, allow unpacking of “multi-sectoral” and “sector not specified” classifications, and enable estimation of flows to new themes, including World Bank Global Challenge Programs, International Development Association–20 Special Themes, and Cross-Cutting Issues. Validation against both Creditor Reporting System benchmarks and International Development Association commitment data demonstrates robustness. This approach illustrates how machine learning and the new advances in large language models can enhance the monitoring of global aid flows and inform future improvements in aid classification and reporting. It offers a useful tool that can support more responsive and evidence-based decision-making, helping to better align resources with evolving development priorities.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication SMEs and Women-owned SMEs in Mongolia : Market Research Study(Washington, DC, 2014)Chapter one summarizes the scope of the study and outlines its key objectives. It explains the rationale for collecting data on SMEs in Mongolia in general and women-owned SMEs in particular. It also provides recommendations for integrating the insights form the study into the on-the-ground practice of SME banking, as well as potential interventions on the regulatory and policy level. Chapter two begins with the analysis of the general macroeconomic context and provides an overview of the SME sector in Mongolia. The chapter analyzes the latest trends in development of the business environment and the legal framework relevant for SMEs and women-owned SMEs. Chapter three examines the aspect of supply in financial and non-financial products and services currently offered to SMEs by commercial banks and non-bank financial institutions. It also reviews the support provided to SMEs by international financial institutions. Chapter four provides detailed overview of the findings of the demand study, explores the features of SMEs, their relationships with banks and NBFIs as well as aspects of current use of bank loans. The chapter further analyzes the usage and demand for other banking products and services by SMEs. Chapter five summarizes the key constraints faced by the SMEs and female-owned SMEs revealed in the interviews with stakeholders and the face to-face interviews with business owners. Finally, chapter six uses the findings to draw conclusions and recommendations on possible measures to address the challenges of SMEs and women-owned SMEs specifically at different stakeholder levels: governmental and regulatory authorities, international finance institutions, financial institutions and SME development organizations.Publication SMEs for Job Creation in the Arab World(World Bank, Washington, DC, 2012)The Arab Spring in the Middle East and North Africa (MENA) region has brought to the forefront key challenges: the need to create job opportunities, equal access, a level playing field, transparency and accountability, and a fair and competitive environment. Crony capitalism, the privileged access of certain elites to favorable legal and regulatory treatment, access to markets, and the coincidence of political and economic power, was a major concern contributing to the uprising. Many saw privilege and corruption as the source of unemployment and inequality, effectively raising barriers to entry and growth for the majority of entrepreneurs. At the same time, practices such as connected lending and preferential land allocations, contributed to poor performance of key institutions, underpinning the market economy. It is critical for the MENA countries to achieve the aspirations of their people and attain sustainable and inclusive development by expanding private-led employment and creating entrepreneurship opportunities. This report assesses the supply and demand of financial services to small and medium enterprises (SMEs) in the MENA region, as well as the regulatory, institutional and policy environment that determines the cost, risk, and scale of SME finance. Emerging and promising SME finance models for banks, investors, government and regulators are outlined. These could significantly improve the outreach, viability, risk management, and development impacts of SME finance in the MENA region. SMEs need access to longer term credit products and equity, in addition to working capital loans and trade finance. They also need payment and card services, deposit facilities, liquidity management, risk management tools and insurance. The principal role of the state is as an enabler and regulator, providing the financial infrastructure, and legal and policy frameworks that financial institutions need to be able to meet the range of SME financial needs profitably. All this will contribute to attaining a more sustainable and inclusive system that can play a more important role in economic growth, and the regions prosperity.Publication Finance for All? Policies and Pitfalls in Expanding Access(Washington, DC, 2008)This book, finance for all, presents first efforts at developing indicators illustrating that financial access is quite limited around the world and identifies barriers that may be preventing small firms and poor households from using financial services. Based on this research, the report derives principles for effective government policy on broadening access. The report's conclusions confirm some traditional views and challenge others. For example, recent research provides additional evidence to support the widely-held belief that financial development promotes growth and illustrates the role of access in this process. Improved access to finance creates an environment conducive to new firm entry, innovation, and growth. However, research also shows that small firms benefit the most from financial development and greater access-both in terms of entry and seeing their growth constraints relaxed. Hence, inclusive financial systems also have consequences for the composition and competition in the enterprise sector. This report reviews and synthesizes a large body of research, and provides the basis for sound policy advice in the area of financial access. The findings in this report also underline the importance of investing in data collection: continued work on measuring and evaluating the impact of access requires detailed micro data both at the household and enterprise level.Publication Economic Opportunities for Women in the East Asia and Pacific region(World Bank, 2010)East Asia and the Pacific is a region of dynamic growth. Women have contributed significantly to this growth and have benefited from it through active participation in the labor market. However, women are still disproportionately represented in the informal sector and in low paid work. Efforts to identify barriers to women's business and entrepreneurial activities in the region are critical not only to facilitate inclusive growth in a national context but also to counter the increasing trend of female migratory flows in the region. This report highlights' both the challenges and the economic opportunities for businesswomen in the region offers some useful potential pointers for reform.Publication Sustainable Support System for Rural Women Entrepreneurs(World Bank, Washington, DC, 2011-06)Nonfarm sector development in rural Ethiopia is central to generating employment and income and thereby reducing poverty. The improved investment climate could facilitate investments in farm and nonfarm sectors by contributing directly and indirectly to the generation of additional employment for women and men. Ethiopia Industrial Development Strategy 2003 involved efforts to create an enabling environment for the private sector to be a driving force for economic development. The sectoral focus of the strategy is on the development of agro-based industries and on strengthening nonfarm sector. The sustainable support system for rural women entrepreneurs is based on five main components: (i) women's economic empowerment, (ii) market development, (iii) access to markets, (iv) business management support services, and (v) access to credit. Necessary conditions to support nonfarm economic activities, such as physical market development, feeder roads, and transport, will also benefit agriculture and create a virtuous circle of increasing farm and nonfarm income. Women are more likely to be involved in and benefit from nonfarm enterprise activities. Although the system proposed could be targeted at men and women, women could be the main beneficiaries of the support system. This sustainable system is new and innovative in directly supporting the rural poor and women by building the capacity of entrepreneurs and supporting institutions linked to the existing projects. This system may derive maximum synergy effects by integrating with the Agricultural Growth Project (AGP) and the Household Assets Building Program (HABP) of the Productive Safety Nets Project (PSNP) in a complementary relationship.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.