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Small and Medium Scale Enterprises and Poverty Reduction: A case of Pakistan Presenter Mahwish Zafar Ph. D Scholar, Superior University Lahore Co-Author Shazia Kousar Assistant Professor Superior University Lahore
Introduction & Background of the Study • According to SMEDA the SMEs in Pakistan are mostly engaged in the industrial sector which has frequent focus by the Government to boost up the economy and also have an important role through creation of employment and to bring the economic prosperity in the country. The existence of SMEs brings the effective utilization of local resources and boosts up the economies all over the world.
Definition of SMEs in Pakistan Institution SMEDA SME Bank Federal Bureau of Statistics Enterprise Category Nature of Business Number of Employees Value of Capital (Pak Rs) Small Scale Production Sector Up to 36 Up to 20 Million Medium Scale Production Sector Up to 99 Up to 40 Million Small Scale Service Sector N/A Less than 100 Million Medium Scale Service Sector N/A More than 100 Million Small Scale Service Sector Less than 10 N/A Medium Scale Service Sector N/A
Objective of Study Main objective • To find the effects of SMEs Growth on poverty Sub objectives • To find the impact of trade openness on poverty. • To find the impact of inflation on poverty. • To find the impact of economic growth on poverty • To find the impact of income inequality on poverty • To find the impact of Govt expenditure on poverty
Literature Review Researchers/Y Studied ear Country Hegazy (1995) Egypt Haron (2000) Malaysia Hamid and Nordin (2001) Malaysia Karbhari et al. (2004) Nigeria Findings From the empirical results, SMEs’ income captured by their contributions to GDP, are statistically significant in explaining the level of employment and hence poverty reduction. Small and medium enterprises have positive effects in the national development of an economy not only operationally but nominally as well. More effective and fully funded policy program for the development of SMEs, for generating employment opportunities for economic growth, and to empower the poor and deprived. The accounting system of most SMEs lack standards hence, no proper assessment of their performances. The present high mortality rate of SMEs in Nigeria is awful to
Data and Variable • Data is collected from different economic Survey • It covered time from years 2000 -2014 • Dependent variable is Poverty • Independent variables are: SME`s, GDP, Inflation income inequality , Govt expenditure
Purpose Statement: Research Questions: Research Hypothesis – H 1: Small and Medium Enterprises has impact on poverty – H 2: Small and Medium Enterprises has no impact on the economic growth in Pakistan.
Unit Root Test Augmented Dickey- Fuller Test Series Coefficient GDP -6. 43034* Trade -2. 80276* CPI -17. 0376* Govt Exp -14. 3736* Inflation -8. 03394* GINI -4. 41630* HRATIO 1 -24. 5667*
Discussion & conclusion There is no gainsaying the fact that the SMEs remain the main engine of growth in any economy as their operations and investments cover all aspects of economic or business activities. This has been recognized in Pakistan as it is reflected in most government policies. It is not sufficient to know the cardinal roles of the SMEs when they have not been given full incentives for effective performance. These will enable SMEs to play their catalytic role in the economy and help government to reduce the high unemployment rate in the country and by extension, reducing poverty.