Small and Medium Sized Enterprises (SMEs) Development Initiatives and Their Role on Self Employed

Topics: Industry, Private sector, Economic growth Pages: 11 (3933 words) Published: November 10, 2013
Small and Medium Sized Enterprises (SMEs) Development Initiatives and Their Role on Self Employed In pursuit of economic growth the economies of the developing countries around the world face a host of challenges. Widespread poverty, infrastructure & institutional deficit are the major task faced by most economies of strong financial environment which also includes equitable income distribution along with employment creation, while every developing economy may experience its own variant of these problems. In this scenario, the small and medium sized enterprises (SMEs) sector contributes towards distribution, employment, exports, greater output and equitable income so its role becomes extremely important. Dynamism is also added to the economy by the help of this sector. Contribution to the world’s leading and emerging economies can also show the importance of the SME sector. India, China, Brazil, Malaysia and Japan are among other countries that have relied heavily on SME development to fuel economic growth. It is done by the private sector development strategies along with the adoption of intensive policies for implementation. The backbone of economy of Pakistan is SME sector. As clearly indicated by various statistics, the significance of their role is quite clear. The GDP Estimates show that they contribute 40 percent to the manufacturing sector which employs 70.49 percent of the total non-agriculture labor force. It is imperative to support small and medium sized enterprises (SME) development in order to sustain a healthy SME sector, in a well-coordinated manner as the central pillar of growth. For economic revival, poverty alleviation and employment generation the center piece of Government’s strategy is to promote the SMEs sector. The formulation of a comprehensive SME Policy to this end was the logical first step reflecting the viewpoints of multiple stakeholders. By 1970s, Pakistan had substantial capacity in engineering industries which includes cement, paper, fertilizers, textiles, vegetable ghee, sugar, and other chemicals. Basic consumer goods and their imports have been reduced by the country so growth in exports had started to increase substantially due to manufacturer’s substantial contribution to the economy. In production of capital goods, there was little headway due to import substitution which only occurred in consumer goods. To conduct industrial operations the country has yet to develop managerial and technical personnel in a modern scientific manner which is necessary for the growth of the socio-economic aspect of human society. In order to build an industrial sector from scratch, a great deal was accomplished in this regard. But to create a balanced, efficient and modern industrial sector some more complex and challenging tasks were still required. Industrial development in Pakistanis a story of half-baked initiatives, policy U-turns and it is also a tale of unfulfilled expectations missed opportunities, and misgivings, hatched in an overall environment of mistrust between public and private sectors. Interestingly, this country developed first Five Year Plan which was a program to develop and uplift for Small Scale Enterprises (SMEs). Inconsistency in implementation of program/projects due to lack of political will resulted in weak coordination between various implementing agencies and this important sector of the economy as a result slowed down the pace of reforms. In short, in order to generate employment for its growing populace Pakistan did not capitalize on the potential of the SME sector which would have also helped in tackling the problem of poverty. 1.1Development of Small and Medium Sized Enterprises (SMEs): Over the years, Large Enterprises (LEs) and Small Enterprises (SEs) and their basic difference have come to fore. Benefited from economies of scale it was realized, that LEs though small in number are going with the same procedures and policies over the years, while SEs in the process...
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