SMEs, Growth, and Poverty

Thorsten Beck, Asli Demirguc-Kunt, Ross Levine

NBER Working Paper No. 11224
Issued in March 2005
NBER Program(s):   EFG

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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Document Object Identifier (DOI): 10.3386/w11224

Published: Beck, Thorsten, Asli Demirguc-Kunt and Ross Levine. "SMEs, Growth, And Poverty: Cross-Country Evidence," Journal of Economic Growth, 2005, v10(3,Sep), 199-229

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