SMEs and Economic Development
Small Medium Enterprises (SMEs) play a very vital role in the economic development of the underdeveloped country, especially Pakistan. SMEs are mostly defined in terms of the size of investment &labor force. It is considered as the backbone of the economy. For example textile industry of Pakistan, The cottage industry, SMEs play an important role in the economic development of a country.For example regarding production, handicrafts, handlooms, sericulture and coir industries. Their importance can’t be ignored, because it is linked to economic growth.The 15.4% growth of Pakistan economy are due to small or medium enterprises, which is considers the core issue in the country’s progress especially the prosperity that are surviving with low scale income due to which Pakistan ranks 135th out of 174 countries on human development index.
SMEs are now considered as a tool for national benefits.SME contributes 25% export of manufacturing goods, and 30% of GDP is the outcome of business efforts of SMEs.Turning potential into profits gives us a fair picture of the role of SMEs in Pakistan. There is need of group support of politicians, business organizations, trade organizations, and economists to SME sector in Pakistan.In Pakistan, source of source of different opportunities for economic progress as: increase in job opportunities, can produce maximum from limited resources, improving living of standard and economic growth, tool to provide employment, largest source of domestic employment, to mitigate the problem of imbalance in the balance of payment accounts through its export promotion, to help widespread equal distribution of income and wealth, to release scarce capital towards productive use, to overcome the mobilization to big cities, to reduce the poverty level and it is a largest source of domestic employment
Syed Saquib Mohyuddin, CEO SME Business Support Fund SME sector said few days ago that SMEs is the backbone of Pakistan’s economy in term of their contribution towards GDP, employment generation and export development and also said to design the fund and financial support by the banks to promote SMEs in Pakistan.SMEs in Pakistan have cheaper man power with talents, SMEs growth in Pakistan isallied with artistic and capable entrepreneurs, and their aim is to explore opportunities toadvance their life and status. If entrepreneurs in Pakistan are supported by financial schemes and their small companies are equipped with necessary technologies then these companies may be proved as large support to overall economy of country.
Generating profit with limited resources which ultimately have accelerated world economy by opening doors for different countries and increased relations by exchanging goods and services. But government policies for infrastructure support, technology up gradation, preferential access to credit, preferential policy support can lead the economy to update itself to a higher scale of marketing. SMEs will be the main source of poverty reduction in Pakistan that will create the value and innovation for the country in the days to come.