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© Bobunov A.Yu., 2024
УДК 33
Orazberdieva G.,
student
International horse breeding Academy named after Aba Annaev
Charyberdiev K.,
teacher
International horse breeding Academy named after Aba Annaev
Arkadag, Turkmenistan
THE ROLE OF SMALL AND MEDIUM ENTERPRISES (SMES) IN ECONOMIC GROWTH ABSTRACT
This article examines the vital role that small and medium enterprises (SMEs) play in economic growth. It discusses how SMEs drive innovation, create jobs, and contributeto economic diversification. The paper also explores challenges faced by SMEs and suggests policies to support their development.
Keywords:
small and medium enterprises, economic growth, innovation, job creation, economic diversification, SME support policies.
Small and medium enterprises (SMEs) are the backbone of many economies, contributing significantly to economic growth, job creation, and innovation. This article explores the crucial role of SMEs in driving economic development, the challenges they face, and the policies needed to support their growth and sustainability.
SMEs are often at the forefront of innovation, bringing new products and services to market. Their smaller size and flexibility allow them to adapt quickly to changing market conditions and customer needs. Innovation in SMEs can lead to increased competitiveness and productivity, fostering economic growth. According to a report by the OECD (2017), SMEs contribute to around 60-70% of total employment and generate a significant portion
of new jobs and innovations.
SMEs are major job creators, providing employment opportunities and contributing to economic diversification. They often operate in various sectors, including manufacturing, services, and agriculture, helping to build a resilient economy. In developing countries, SMEs play a critical role in reducing poverty and promoting inclusive growth by offering employment to a large segment of the population. A study by the International Labour Organization (2015) found that SMEs are responsible for creating over 50% of new jobs globally.
To address these challenges and support the growth of SMEs, governments and policymakers can implement various measures, such as:
1. Financial Support Programs: Establishing financial support programs, such as grants, low-interest loans, and credit guarantees, can help SMEs access the necessary capital. Governments can also encourage banks and financial institutions to develop SME-friendly lending practices.
2. Simplifying Regulations: Streamlining regulatory processes and reducing bureaucratic burdens can create a more conducive environment for SMEs. Implementing one-stop-shop services for business registration and compliance can save time and reduce costs for SMEs.
3. Market Access Initiatives: Supporting SMEs in accessing new markets through export promotion programs, trade fairs, and online marketplaces can enhance their growth potential. Providing information and resources on market opportunities can help SMEs navigate international markets.
4. Training and Education: Investing in training and education programs for SME owners and employees can enhance their skills and productivity. Governments can collaborate with educational institutions and industry associations to offer relevant courses and workshops.
Several SMEs have successfully overcome challenges and contributed significantly to their economies. For example, Grameen Bank in Bangladesh, founded by Muhammad Yunus, provides microloans to entrepreneurs, particularly women, to start and grow their businesses. Another example is Warby Parker, a U.S.-based eyewear company that has revolutionized the industry with its innovative business model and commitment to social responsibility.
Small and medium enterprises play a crucial role in driving economic growth, innovation, and job creation. However, they face several challenges that can hinder their development. By implementing supportive policies, such as financial support programs, simplifying regulations, enhancing market access, and investing in training and education, governments can create an enabling environment for SMEs to thrive and contribute to sustainable economic growth.
References:
1. OECD (2017). "Enhancing the Contributions of SMEs in a Global and Digitalized Economy." Retrieved from [https://www.oecd.org/mcm/documents/C-MIN-2017-8-EN.pdfHhttps7/www.oecd.org/mcm/documents/C-MIN-2017-8-EN.pdf)
2. International Labour Organization (2015). "Small and Medium-sized Enterprises and Decent and Productive Employment Creation." Retrieved from [https://www.ilo.org/global/topics/employment-promotion/sme/lang--en/index.htm](https://www.ilo.org/global/topics/employment-promotion/sme/lang--en/index.htm)
3. Muhammad Yunus, "Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs"
4. The World Bank (2020). "Small and Medium Enterprises (SMEs) Finance." Retrieved from [https://www.worldbank.org/en/topic/smefinance](https://www.worldbank.org/en/topic/smefinance)
© Orazberdieva G., Charyberdiev K., 2024
