The Role of Small and Medium Enterprises in Perspective of Labour Abundant Economy of Pakistan

Abstract

The small and medium enterprise sector has played a significant role in theincome and employment generation in the developed and developingeconomies. The current study is conducted to find out the potential of theSMEs to achieve the economic and social objectives. The survey data of 300SMEs indicates the wider gap between the demands for SME financing and thesupply-side. The test result p<0.05 indicates that the lack of access to capitalinvestment, finance, and support from the public sector institutions to upgradethe technology and commutation means are the major obstacles for the SME'sto scale-up their performance in the current market reforms. While the resultof the regression model (r=0.992) indicates a strong correlation between thevariables. In fact, those SME's had overcome the issues of technology,communication, dearth of functional barriers because they had the access tothe formal sources of financing. Therefore, to attain the target of 10 millionjobs and reduce unemployment in the country, the policymakers have to makenecessary arrangements to establish new financial sources and facilitate theexisting financial firms to expand their network for the advancement andmodernization of SMEs operating in the formal and informal fold of theeconomy.