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SMEs and its Role in Economic and Socio-Economic Development of Pakistan

Ammad Zafar and Sadaf Mustafa

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2017, vol. 7, issue 4, 195-205

Abstract: SME‘s contributes to over 55% of GDP and over 65% of total employment in high-income countries. SME‘s and informal enterprises, account for over 60% of GDP and over 70% of total employment in low-income countries, while they contribute over 95% of total employment and about 70% of GDP in middle-income countries. Small and medium-sized enterprises (SMEs) are non-auxiliary, autonomous firms which employ less than 250 number of workers in Pakistan or having paid-up capital up to Rs.25 million and sales up to Rs.250 million per annum. Moreover, SME segment is the foundation of Pakistan's economy as far as its commitment towards GDP, work era and fare improvement. Economy related access is a key driver in building up the SME division which thusly prompts economic growth of the country. SMEs constitute about 90% of the considerable number of ventures in Pakistan; utilize 80% of the non-rural work constrain; and their contribution in the yearly GDP is up to 40%, roughly it has proportion of 30% in Pakistan's all exports. SMEs are spread in all areas of Pakistan with a noteworthy fixation in Punjab (65.4%). The contribution of Balochistan in the nation's SME part happens to be the littlest (2.3%) while those of Sindh and KhyberPakhtunkhwa are 18% and 14.3%, separately. Despite of significant contribution of SMEs to the economic growth of Pakistan, more than 90% young people in the biggest city i.e. Karachi, believe they do not have enough economic opportunities for their professional growth. The studies reveal that, SMEs not only impacts GDP. It also helps to enhance the livelihood of people of the country by creating more economic opportunities. The study focuses on structural analysis of SMEs and its role on economic and socio-economic growth of Pakistan. It also discusses the socio-economic challenges faced by Pakistan.

Keywords: Economic growth; socio-economic growth; economic opportunities; Gross Domestic Product (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:hur:ijaraf:v:7:y:2017:i:4:p:195-205