SME in the economic development of Pakistan

economic development, SME, Pakistan

1. SMEs in economic development of Pakistan PART A

2. Small and medium-sized enterprises Small and medium-sized enterprises  (SMEs) are non-subsidiary, independent firms which employ fewer than a given number of employees. This number varies across countries . According to Pakistan Today (2021), “SMEs  contributed 30 per cent to GDP, 25 per cent to exports and 78 per cent to industrial employment  that showed their important role in the economic development of the country”.

3. SMEs are important to every country SMEs are particularly important nowadays in any economy. They are  the source of a significant share of job creation in any modern day economy . These companies also contribute significantly to GDP growth around the world and also ensure that there is proper flow of money across the economy . The SME sector is a major engine which  encourages the growth of jobs and wealth creation in  the country's economic system.

4. Effect of SME on economies Firstly, SMEs boost entrepreneurship and competition and thus have external benefits for development, invention, and cumulative productivity growth across the economy. Second, they are usually more competitive than large companies, but the financial system plus other systemic weaknesses and a non-conductive macroeconomic environment hinder the growth of SMEs. Third, the expansion of SMEs raises employment faster than larger enterprises can move forward, as the SME sector is more labor-intensive

5. The Importance Of Small And Medium Enterprises In Modern Economy Entrepreneurship creates entrepreneurial activity. In order to gain a better insight into the operations of small and medium enterprises, the paper points to the advantages and disadvantages of starting a business through this form of entrepreneurial activity. Smaller enterprises achieve success in industries where flexibility and innovation are of great importance, while they are less successful in industries where resources and resource management are crucial.

6. Advantages of small and medium enterprises The advantages of small and medium enterprises are: independence, self-actualization, profit-making, market flexibility, more efficient use of available resources, Innovation

7. Potential Disadvantages of SME`s The potential disadvantages: lack of knowledge and expertise of small and medium enterprises, lack of managerial skills, risk of closing down the company, long working hours and hard work, uncertainty of income, High level of stress and total responsibility

8. Reasons for starting a business through SME`s The reasons for starting a business through small and medium enterprises can be analyzed as: Push motives Pull motives.

9. a. Pull motives Pull motives exist when individuals are motivated by specific ideas they want to implement when starting a business. Pull motives include: desire for independence, desire to use the identified market opportunity, Turning hobbies or previous work experience into business and financial incentives.

10. b. Push motives On the other hand, a large number of individuals decide to establish a new company out of necessity, due to the push motives such as: dismissal, job insecurity, Disagreement with the previous employer, etc.