Yes, small and medium enterprises affect economic growth, as most investors start small projects and little by little their projects expand and on the other hand, these projects affect the operation of a number of manpower, the exploitation of untapped resources, the provision of goods at lower competitive prices, and other economic connections.
SMEs are the basis for economic growth in developing and underdeveloped economies. The contribute significantly to these countries' GDP.
small and medium enterprises affect economic growth by create employment.
In our study (Hettihewa, S., and Wright, C.S. 2018. Nature and Importance of Small Business in Regional Australia, with a Contrast to Studies of Urban Small Businesses, Australasian Journal of Regional Studies, 24(3), 96-121), we found that the contribution of SMEs to GDP and/or Foreign Exchange was relatively small, but that SMEs provided the majority of jobs and new employment opportunities, especially when the returns to the SME owners is considered.
SMEs are particularly important in maintaining the vibrancy of Rural Communities and can slow the rural exodus to the big cities. SMEs also provide a way for older people to contribute to their communities at a pace that is appropriate for them.
Most big companies start as big companies and most SMEs start as SMEs and very few grow into big companies.
Dear, Hauwa Muhammad Guduf ,
I think that SMEs and their sectoral analysis are essential for analyzing the situation and a prerequisite for the development of regions and countries. Measures to support certain sectors of the economy should be based on an assessment of the effect of these actions on the country's economy and their effect on regional development. This is necessary to trace their impact on the sectors in which they are organized.
Entrepreneurship is the basis for increasing employment in the region or country, as well as increasing added value.
Among the hypotheses of New Economic Geography there are theoretical models showing that when a large firm enters a market, there is a gradual displacement of small firms, with an eventual increase in prosperity. On the one hand, the development of both small and large firms may depend on common factors, such as the size of the local market, the availability of external markets, and "first nature" conditions. On the other hand, small firms may develop where there are no larger competitors capable of displacing small businesses, taking advantage of opportunities to significantly reduce product prices through economies of scale.
According to the Annual report on European SMEs for 2018 - SMEs accounted for 99.8% of all enterprises in the EU non-financial business sector, so they are usually seen as crucial for economic growth (the backbone of the economy).
I have recently asked a similar question and would like to hear your thoughts -
https://www.researchgate.net/post/Does_expertise_in_standardization_exist_in_SMEs
Kind regards,
Biljana
Everyone keeps talking about the relative numbers of SMEs -- in the case of contribution to GDP, size does matter. SMEs may make up 80-90 percent of the number of businesses in a country, but most of them are bleeding money or just breaking even. Medium to Big Business creates the majority or even the vast majority of GDP and foreign exchange. SMEs are important providers of employment -- especially when returns to owners are included, but do not overplay their contribution to an economy. Also, very very few small companies become big companies -- although some big companies do become small companies.