IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i5p1727-d325078.html
   My bibliography  Save this article

Is the China-Pakistan Economic Corridor an Opportunity or a Threat for Small and Micro-Entrepreneurs? Empirical Evidence from Northern Pakistan

Author

Listed:
  • Saranjam Baig

    (Center for Research on China–Pakistan Economic Corridor, Karakoram International University, Gilgit 15100, Pakistan
    College of Economics and Political Science, Sultan Qaboos University, Muscat, Al-Khoud 123, Oman)

  • Mir Qasim

    (Center for Research on China–Pakistan Economic Corridor, Karakoram International University, Gilgit 15100, Pakistan)

  • Li Xuemei

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

  • Khalid Mehmood Alam

    (Center for Research on China–Pakistan Economic Corridor, Karakoram International University, Gilgit 15100, Pakistan
    School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

Abstract

Are the mega-projects an opportunity or threat for micro and small firms? This question has rarely been examined in the literature. Micro and Small Enterprises (MSEs) have always been at the forefront, playing an important role in the development of rural economies in developing countries like Pakistan. Since the China–Pakistan Economic Corridor (CPEC) project has been initiated, northern Pakistan (Gilgit-Baltistan) has witnessed a huge tourist inflow. As a result, the mushrooming of businesses along the CPEC route is a new phenomenon. The increasing trends in tourism inflow on one side offer new opportunities for MSEs while, on the other side, it increases the competition level among the firms. In the background, this research aims at contributing to existing academic scholarship on whether increasing competition is healthy for the growth and sustainability of MSEs or it might challenge their future progress. To examine this question, we carried out field surveys. Through questionnaires, we collected data for 280 micro and small firms operating in the tourism sector along the CPEC route. The study investigates current and future prospects of micro and small enterprises in the region, given that the CPEC is fostering tourism, which has its effects on the allied industries as well. The study relies on the Jovanovic (1982) model of firm growth and theory of market participation for its theoretical foundation and uses a logistic regression model as the estimation strategy. The findings suggest that the CPEC is not the only opportunity for tourism-related micro and small enterprises but also helpful for the growth of medium and large firms. The implications are that if MSEs could not prepare themselves to compete, there is a chance that medium and large firms would replace them. Growth of MSEs is conditional on easy access to finance and borrowings.

Suggested Citation

  • Saranjam Baig & Mir Qasim & Li Xuemei & Khalid Mehmood Alam, 2020. "Is the China-Pakistan Economic Corridor an Opportunity or a Threat for Small and Micro-Entrepreneurs? Empirical Evidence from Northern Pakistan," Sustainability, MDPI, vol. 12(5), pages 1-19, February.
  • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1727-:d:325078
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/5/1727/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/12/5/1727/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ghulam Abbas & Zhiming Liu & Shahbaz Hassan Wasti & Uzma Munir & Muhammad Abbas, 2019. "CPEC’s Utility and Concerns under OBOR Initiative: A Pakistani Industrial Perspective," Economies, MDPI, vol. 7(3), pages 1-13, September.
    2. Baldwin, John & Picot, Garnett, 1995. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Small Business Economics, Springer, vol. 7(4), pages 317-331, August.
    3. Rashid Menhas & Shahid Mahmood & Papel Tanchangya & Muhammad Nabeel Safdar & Safdar Hussain, 2019. "Sustainable Development under Belt and Road Initiative: A Case Study of China-Pakistan Economic Corridor’s Socio-Economic Impact on Pakistan," Sustainability, MDPI, vol. 11(21), pages 1-24, November.
    4. Ishtiaq Ahmad & Judit Oláh & József Popp & Domicián Máté, 2018. "Does Business Group Affiliation Matter for Superior Performance? Evidence from Pakistan," Sustainability, MDPI, vol. 10(9), pages 1-19, August.
    5. Norman R. Smith & John B. Miner, 1983. "Type of entrepreneur, type of firm, and managerial motivation: Implications for organizational life cycle theory," Strategic Management Journal, Wiley Blackwell, vol. 4(4), pages 325-340, October.
    6. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October.
    7. Liaqat Ali & Jianing Mi & Mussawar Shah & Sayed Jamal Shah & Salim khan & Kausar BiBi, 2017. "The Potential Socio-Economic Impact of China Pakistan Economic Corridor," Asian Development Policy Review, Asian Economic and Social Society, vol. 5(4), pages 191-198.
    8. Liaqat Ali & Jianing Mi & Mussawar Shah & Sayed Jamal Shah & Salim khan & Kausar BiBi, 2017. "The Potential Socio-Economic Impact of China Pakistan Economic Corridor," Asian Development Policy Review, Asian Economic and Social Society, vol. 5(4), pages 191-198, December.
    9. Basu, Anuradha & Goswami, Arati, 1999. "Determinants of South Asian Entrepreneurial Growth in Britain: A Multivariate Analysis," Small Business Economics, Springer, vol. 13(1), pages 57-70, August.
    10. Nichter, Simeon & Goldmark, Lara, 2009. "Small Firm Growth in Developing Countries," World Development, Elsevier, vol. 37(9), pages 1453-1464, September.
    11. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    12. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
    13. Marie kirsten & Christian Rogerson, 2002. "Tourism, business linkages and small enterprise development in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 19(1), pages 29-59.
    14. McPherson, Michael A., 1996. "Growth of micro and small enterprises in southern Africa," Journal of Development Economics, Elsevier, vol. 48(2), pages 253-277, March.
    15. Ahmad Saad & Guan Xinping & Mariah Ijaz, 2019. "China-Pakistan Economic Corridor and Its Influence on Perceived Economic and Social Goals: Implications for Social Policy Makers," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
    16. Thomas, Rhodri & Shaw, Gareth & Page, Stephen J., 2011. "Understanding small firms in tourism: A perspective on research trends and challenges," Tourism Management, Elsevier, vol. 32(5), pages 963-976.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saranjam Baig & Amjad Ali Khan & Aftab Ahmed Khan, 2021. "A time series analysis of causality between tourist arrivals and climatic effects for nature-based tourism destinations: evidence from Gilgit-Baltistan, Pakistan," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(4), pages 5035-5057, April.
    2. Khalid Mehmood Alam & Li Xuemei & Saranjam Baig & Li Yadong & Akber Aman Shah, 2020. "Analysis of Technical, Pure Technical and Scale Efficiencies of Pakistan Railways Using Data Envelopment Analysis and Tobit Regression Model," Networks and Spatial Economics, Springer, vol. 20(4), pages 989-1014, December.
    3. Aftab Ahmed Khan & Saranjam Muhammad Baig & Faqeer Muhammad, 2020. "China-Pakistan Economic Corridor, ICTs, and Digital Economy: A Cross-District Analysis of Baseline Data for Gilgit-Baltistan," Global Regional Review, Humanity Only, vol. 5(1), pages 207-221, March.
    4. Elena Aleksandrovna Egorycheva & Nataliya Valerievna Dyuzheva & Andrey Vladimirovich Girinskiy & Ekaterina Petrovna Makarova Korobeinikova, 2020. "China-Pakistan Economic Corridor (CPEC) as a Flagship of Chinese Belt and Road Initiative," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(Special 1), pages 353-363.
    5. Alam, Khalid Mehmood & Li, Xuemei & Baig, Saranjam & Ghanem, Osman & Hanif, Salman, 2021. "Causality between transportation infrastructure and economic development in Pakistan: An ARDL analysis," Research in Transportation Economics, Elsevier, vol. 88(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blessing Atwine & Ibrahim Mike Okumu & John Bosco Nnyanzi, 2023. "What drives the dynamics of employment growth in firms? Evidence from East Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-25, December.
    2. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    3. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    4. Subash Sasidharan & S. N. Rajesh Raj, 2014. "The Growth Barriers of Informal Sector Enterprises: Evidence from India," The Developing Economies, Institute of Developing Economies, vol. 52(4), pages 351-375, December.
    5. Álvarez, Roberto & Vergara, Sebastián, 2013. "Trade exposure, survival and growth of small and medium-size firms," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 185-201.
    6. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    7. Calza, Elisa & Goedhuys, Micheline, 2016. "Entrepreneurial heterogeneity and the design of entrepreneurship policies for economic growth and inclusive development," MERIT Working Papers 2016-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    9. Geurts, Karen & Van Biesebroeck, Johannes, 2016. "Firm creation and post-entry dynamics of de novo entrants," International Journal of Industrial Organization, Elsevier, vol. 49(C), pages 59-104.
    10. Arouri, Hassan & Youssef, Adel Ben & Quatraro, Francesco & Vivarelli, Marco, 2018. "The Determinants of Young Firms Growth in Tunisia," IZA Discussion Papers 11400, Institute of Labor Economics (IZA).
    11. Fardous Alom & Moha Asri Abdullah & Abdul Rashid Moten & S. M. Ferdous Azam, 2016. "Success factors of overall improvement of microenterprises in Malaysia: an empirical study," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 6(1), pages 1-13, December.
    12. Tidiane Kinda & Josef Loening, 2010. "Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania," African Development Review, African Development Bank, vol. 22(1), pages 173-207.
    13. Reeg, Caroline, 2015. "Micro and small enterprises as drivers for job creation and decent work," IDOS Discussion Papers 10/2015, German Institute of Development and Sustainability (IDOS).
    14. Loening, Josef & Lane, William Leeds, 2007. "Tanzania: Pilot Rural Investment Climate Assessment. Stimulating Nonfarm Microenterprise Growth," MPRA Paper 24824, University Library of Munich, Germany.
    15. Micheline Goedhuys & Leo Sleuwaegen, 2010. "High-growth entrepreneurial firms in Africa: a quantile regression approach," Small Business Economics, Springer, vol. 34(1), pages 31-51, January.
    16. Andam, K. & Asante, S., 2018. "Determinants of firm exit and growth in the food processing sector: Evidence from Ghana," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277487, International Association of Agricultural Economists.
    17. Andam, Kwaw S. & Asante, Seth, 2018. "Firm employment, exit, and growth in the food processing sector: Evidence from Ghana," IFPRI discussion papers 1755, International Food Policy Research Institute (IFPRI).
    18. Hassan Arouri & Adel Ben Youssef & Francesco Quatraro & Marco Vivarelli, 2020. "Drivers of growth in Tunisia: young firms vs incumbents," Small Business Economics, Springer, vol. 54(1), pages 323-340, January.
    19. Rashid Menhas & Shahid Mahmood & Papel Tanchangya & Muhammad Nabeel Safdar & Safdar Hussain, 2019. "Sustainable Development under Belt and Road Initiative: A Case Study of China-Pakistan Economic Corridor’s Socio-Economic Impact on Pakistan," Sustainability, MDPI, vol. 11(21), pages 1-24, November.
    20. Rolando Vaz, 2023. "Firm growth in the Portuguese footwear industry: the location dilemma," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(2), pages 407-427, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1727-:d:325078. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.