An Empirical assessment of the economic role of small-to-medium enterprises in emerging economies

Abstract

This research aims to empirically investigates the impact of small to medium enterprises on the economic growth on sample of emerging economies. For this purpose, ten emerging economies is selected as a sample size which are Argentina, India, Turkey, South Africa, Saudi Arabia, Russia, Poland, Pakistan, Nigeria, and Mexico for the sample period 2006 – 2018. This research selects economic variables such as gross domestic product, unemployment rate, and inflation rate as dependent variables and foreign direct investment, production of natural resources, government expenditure, money supply, volume of trade and number of registered small to medium enterprises in each country as independent variables. Current research seeks to analyze the role of SMEs impact on economic growth of the emerging economies while using generalized method of moments (GMM) approach for the selected panel of emerging economies. This research finds positive and statistically significant impact of SMEs on the economic growth and employment generation for the selected sample of emerging economies although these effects are inflationary. The significance of this research is to highlight the importance of the strategic role of SMEs to boost economic growth and to develop entrepreneurial capabilities in the emerging economies. However, this research is constrained by the limited availability of the data.