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SMEs, Growth, and Poverty: Cross-Country Evidence

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This paper explores the relationship between the relative size of the Small and Medium Enterprise (SME) sector, economic growth, and poverty alleviation using a new database on the share of SME labor in the total manufacturing labor force. Using a sample of 45 countries, we find a strong, positive association between the importance of SMEs and GDP per capita growth. The data do not, however, confidently support the conclusions that SMEs exert a causal impact on growth. Furthermore, we find no evidence that SMEs alleviate poverty or decrease income inequality.

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Authors and Affiliations

  1. The World Bank, 1818 H Street NW, 20433, Washington, D.C., USA

    Thorsten Beck & Asli Demirguc-Kunt

  2. Department of Economics, Brown University, 64 Waterman Street, Providence RI 02912, The NBER

    Ross Levine

Authors
  1. Thorsten Beck
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  2. Asli Demirguc-Kunt
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  3. Ross Levine
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Beck, T., Demirguc-Kunt, A. & Levine, R. SMEs, Growth, and Poverty: Cross-Country Evidence. J Econ Growth 10, 199–229 (2005). https://doi.org/10.1007/s10887-005-3533-5

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