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The Small and Medium Enterprises and Poverty in Pakistan: An Empirical Analysis

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  • Ali, Sharafat

Abstract

Small and Medium Enterprises (SMEs) are considered to play an important role in the economic growth, employment generation and poverty alleviation in the economy. The annual time series data is used for examination of impact of SMEs on poverty in Pakistan for the period of 1972-2008. The study utilizes Johansen cointegration and error correction mechanism to examine long run and short impacts small scale industries and other explanatory variable on poverty in Pakistan. The results of the study confirm a strong and poverty alleviating impact of small scale industries’ output in Pakistan. The study suggests the economic policy makers to focus on the establishment of formal financial markets to overcome the financial constraints faced by the SME sector in Pakistan. Simplification of lending procedures, enforcement of credit rights, and reduction in credit costs would be helpful for the establishment of robust SME sector in Pakistan.

Suggested Citation

  • Ali, Sharafat, 2013. "The Small and Medium Enterprises and Poverty in Pakistan: An Empirical Analysis," MPRA Paper 50506, University Library of Munich, Germany, revised Jul 2113.
  • Handle: RePEc:pra:mprapa:50506
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    File URL: https://mpra.ub.uni-muenchen.de/50506/1/MPRA_paper_50506.pdf
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    References listed on IDEAS

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    1. Judith Jordan & Julian Lowe & Peter Taylor, 1998. "Strategy and Financial Policy in UK Small Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(1&2), pages 1-27.
    2. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    3. Gebremariam, Gebremeskel H. & Gebremedhin, Tesfa G. & Jackson, Randall W., 2004. "The Role Of Small Business In Economic Growth And Poverty Alleviation In West Virginia: An Empirical Analysis," 2004 Annual meeting, August 1-4, Denver, CO 20290, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. World Bank, 2008. "World Development Indicators 2008," World Bank Publications, The World Bank, number 11855, April.
    5. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    6. Liedholm, Carl & Mead, Donald C., 1987. "Small Scale Industries in Developing Countries: Empirical Evidence and Policy Implications," Food Security International Development Papers 54062, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    7. Durbin, J, 1970. "Testing for Serial Correlation in Least-Squares Regression When Some of the Regressors are Lagged Dependent Variables," Econometrica, Econometric Society, vol. 38(3), pages 410-421, May.
    8. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    9. Eliana Cardoso, 1992. "Inflation and Poverty," NBER Working Papers 4006, National Bureau of Economic Research, Inc.
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    12. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    13. Ravallion, M. & Datt, G., 1991. "Growth and Redistribution Components of Changes in Poverty Measures," Papers 83, World Bank - Living Standards Measurement.
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    Cited by:

    1. Sharafat, Ali & Hamid, Waqas & Muhammad, Asghar & Raheel Abbas, Kalroo & Muhammad, Ayaz & Mukhtyar, Khan, 2013. "Foreign Capital and Investment in Pakistan: A Cointegration and Causality Analysis," MPRA Paper 55640, University Library of Munich, Germany, revised 28 Apr 2013.

    More about this item

    Keywords

    Poverty; Small and Medium Enterprises; Income Inequality; Population Growth;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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