Impact of Small and Medium Scale Enterprises on Poverty Reduction in developing country: A case of Pakistan

Mahwish zafar, Muhammad Waqas, Muhammad Nawaz

Abstract


This research has been conducted to examine the role of SME`s to eradicate poverty in Pakistan over the period of 2001-2015. The study investigates relationship by using secondary data from World development indicator by estimating simple linear regression model. Results indicate that small medium enterprises have a negative association with poverty and significantly lower poverty rate in Pakistan. SMEs generate employment opportunities which contribute to the poverty alleviation in the economy of Pakistan. Moreover, human capital and government expenditure also significantly reduce poverty in Pakistan. As government expenditure and human capital increase, it causes to lower poverty growth rate. Similarly trade and inflation also have significant association with poverty, however, inflation and poverty have positive association while trade has the negative association with poverty growth rate in Pakistan. The value of R square (0.756) indicates that model is a good fit and F-ratio states the overall significance of the model. Therefore, results suggest that government should adopt the policies that promote SME growth rate, trade openness, human capital, GDP, government development expenditure and lower inflation rate to control poverty in Pakistan.

Keywords: SMEs, Poverty reduction, inflation, trade openness, government expenditure.


Keywords


Economics

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DOI: http://dx.doi.org/10.22555/pbr.v20i3.1413

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This work is licensed under a Creative Commons Attribution 4.0 International License.