Small and Medium Enterprises, Growth, and Poverty : Cross-Country Evidence

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...

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Bibliographic Details
Main Authors:	Beck, Thorsten, Demirgüç-Kunt, Asli, Levine, Ross
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	SMALL & MEDIUM SCALE ENTERPRISES MANUFACTURING ENTERPRISES ECONOMIC GROWTH GROSS DOMESTIC PRODUCT POVERTY REDUCTION BUSINESS ENVIRONMENT PROPERTY RIGHTS CONTRACT ENFORCEMENT ACCOUNTABILITY AGGREGATE INDEXES AGGREGATE INDICATOR ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE GROWTH AVERAGE GROWTH RATE BLACK MARKET BLACK MARKET EXCHANGE RATE BLACK MARKET EXCHANGE RATE PREMIUM BLACK MARKET PREMIUM BUSINESS CLIMATE BUSINESS CYCLE BUSINESS CYCLE PHENOMENA BUSINESS ENVIRONMENT INDEX BUSINESS ENVIRONMENT INDICATORS BUSINESS ENVIRONMENT INFLUENCE BUSINESS ENVIRONMENT VIEW BUSINESS TRANSACTIONS CAUSAL IMPACT CIVIL LAW COMMERCIAL CONTRACTING COMMERCIAL EXPERIENCE COMMON LAW COMPARATIVE ADVANTAGE COMPETITIVE ENVIRONMENT COMPETITIVENESS ENVIRONMENT CONTRACT ENFORCEMENT CORPORATE FINANCE CORRUPTION COST OF CONTRACT ENFORCEMENT COST OF CONTRACT ENFORCEMENT MEASURES COUNTRY CHARACTERISTICS COUNTRY DATA COUNTRY REGRESSIONS CREDIT MARKETS CRIME CRISES CROSS- COUNTRY ANALYSIS DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC DEVELOPMENT EDUCATIONAL ATTAINMENT EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPLOYMENT ENFORCEABILITY ENTREPRENEURSHIP ENTRY BARRIERS ERROR TERM EXIT BARRIERS EXPANSION EXPORT TRADERS FINANCIAL CONSTRAINTS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARY CREDIT FINANCIAL MARKET FINANCIAL SECTOR FINANCIAL SUPPORT FIRM SIZE GOVERNMENT BUREAUCRACY GOVERNMENT CONSUMPTION GOVERNMENT CONSUMPTION EXPENDITURES GOVERNMENT POLICIES GOVERNMENT SUBSIDIZATION GOVERNMENT SUPPORT GOVERNMENT-BUSINESS COORDINATION GROWTH DETERMINANTS GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN CAPITAL ACCUMULATION INCOME INCOME GROWTH INCOME QUINTILE INCREASE GROWTH INDIVIDUAL COUNTRIES INDUSTRIAL COMPOSITION INDUSTRIAL ORGANIZATION INDUSTRIAL ORGANIZATION LITERATURE INDUSTRIAL ORGANIZATION THEORIES INDUSTRY-LEVEL STUDIES INFLATION RATE INFORMAL ACTIVITY INFORMAL ECONOMY INFORMAL ENTERPRISES INFORMAL ENTREPRENEURS INFORMAL LABOR FORCE INFORMAL SECTOR INFORMAL SOURCES OF FINANCE INSTITUTIONAL ENVIRONMENT INTERNATIONAL AID INTERNATIONAL COMMUNITY INTERNATIONAL TRADE JOB CREATION LABOR ABUNDANCE LABOR FORCE LABOR INTENSITY LABOR MARKET LARGE ENTERPRISES LEGAL ORIGIN LEGAL SYSTEMS LONG-RUN GROWTH MARKET STRUCTURE MARKET TRANSACTION MARKET TRANSACTION COSTS MARKET TRANSACTIONS COSTS MARKET VALUE OF OUTPUT MEDIUM SIZE ENTERPRISES MEDIUM- SIZE NATIONAL POLICIES NATIONAL POVERTY LINE 0 HYPOTHESIS ORGANIZED CRIME PATENT PROTECTION PER CAPITA INCOME POLICY IMPLICATIONS POLICY RESEARCH POLICY VARIABLES POLITICAL STABILITY POLITICAL SUPPORT POLITICAL SYSTEM POVERTY ALLEVIATION POVERTY ALLEVIATION TOOL POVERTY GAP POVERTY INDICATORS POVERTY LINE POVERTY REDUCTIONS POVERTY REGRESSIONS PRIVATE COMMERCIAL TRANSACTIONS PRIVATE PROPERTY PRIVATE SECTOR PRIVATE SECTOR TRANSACTIONS PRODUCTION FUNCTION PRODUCTION OF GOODS PRODUCTIVITY GROWTH PRODUCTIVITY PER CAPITA GROWTH PRODUCTIVITY STUDIES REGULATORY ENFORCEMENT RELATIVE IMPORTANCE RULE OF LAW SIGNIFICANT CORRELATION SIZE OF FIRMS SMALL AND MEDIUM ENTERPRISE SMALL AND MEDIUM ENTERPRISES SMALL FIRMS SMALL MANUFACTURERS SME SME CLUSTERS SME DEVELOPMENT SME EMPLOYMENT SME POLICIES SME POLICY SME SECTOR SME SUPPORT PROGRAMS SMES SOUND BUSINESS ENVIRONMENT SOUND CONTRACT ENFORCEMENT TAXATION TECHNICAL ASSISTANCE TRANSITION ECONOMIES
Online Access:	http://documents.worldbank.org/curated/en/2003/12/2862536/small-medium-enterprises-growth-poverty-cross-country-evidence http://hdl.handle.net/10986/17742

Description
Summary:	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.

Small and Medium Enterprises, Growth, and Poverty : Cross-Country Evidence

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