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

Author

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  • 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, Open Access Journal, vol. 12(5), pages 1-1, February.
  • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1727-:d:325078
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    References listed on IDEAS

    as
    1. 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.
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    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    5. 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.
    6. 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.
    7. 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.
    8. Ishtiaq Ahmad & Judit Oláh & József Popp & Domicián Máté, 2018. "Does Business Group Affiliation Matter for Superior Performance? Evidence from Pakistan," Sustainability, MDPI, Open Access Journal, vol. 10(9), pages 1-1, August.
    9. 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.
    10. 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.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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.

    More about this item

    Keywords

    CPEC; tourism; micro-entrepreneurs; small enterprises; sustainability; Gilgit-Baltistan;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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