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Small and medium enterprises, growth, and poverty : cross-country evidence, Volume 1
Author:Thorsten Beck; ; Ross Levine; Country:World;
Date Stored:2004/01/21Document Date:2003/12/01
Document Type:Policy Research Working PaperSubTopics:Small Scale Enterprise; Environmental Economics & Policies; Governance Indicators; Achieving Shared Growth; Economic Theory & Research; Microfinance; Small and Medium Size Enterprises; Private Participation in Infrastructure
Language:EnglishRegion:The World Region
Report Number:WPS3178Collection Title:Policy, Research working paper series ; no. WPS 3178
Volume No:1  

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.

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