An Assessment of the Effectiveness of Small and Micro-Enterprise Finance in Employment Creation

Alia El Mahdi and Magued Osman
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Alia El Mahdi: Faculty of Economics and Political Science
Magued Osman: The Cabinet, Information And Decision Support Center (IDSC)

No 313, Working Papers from Economic Research Forum

Abstract: Small-scale and micro enterprises have received a considerable amount of attention in recent development literature and in ongoing development strategies in many developed and developing countries. One of the main arguments in favor of small-scale production highlights its ability to create employment opportunities, a result of SME’s tendency to adopt labor-intensive techniques of production. However, despite the evidence of high labor intensity in small-scale activities, the debate over the role of SME in employment creation has not yet been resolved. Furthermore, the role of various financial support programs directed toward small and micro enterprises and their impact on employment creation has not been sufficiently investigated, particularly in developing countries. The following study will attempt to examine how these issues are dealt with in the current literature by analyzing: The relationship between firm size, especially that of small firms, and employment creation; The relation between assistance programs to SME’s and employment creation; The employment–stabilizing behavior of SME’s; Job creation and SME’s in Egypt. It is concluded that providing micro-finance to enterprises would be successful in creating employment, raising productivity and eventually developing the workers’ skills

Pages: 32 pages
Date: 2003-01-05, Revised 2003-01-05
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