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An Assessment of the Effectiveness of Small and Micro-Enterprise Finance in Employment Creation

Author

Listed:
  • Alia El Mahdi

    (Faculty of Economics and Political Science)

  • Magued Osman

    (The Cabinet, Information And Decision Support Center (IDSC))

Abstract

Small-scale and micro enterprises have received a considerable amount of attention in recent development literature and in ongoing development strategies in many developed and developing countries. One of the main arguments in favor of small-scale production highlights its ability to create employment opportunities, a result of SME’s tendency to adopt labor-intensive techniques of production. However, despite the evidence of high labor intensity in small-scale activities, the debate over the role of SME in employment creation has not yet been resolved. Furthermore, the role of various financial support programs directed toward small and micro enterprises and their impact on employment creation has not been sufficiently investigated, particularly in developing countries. The following study will attempt to examine how these issues are dealt with in the current literature by analyzing: The relationship between firm size, especially that of small firms, and employment creation; The relation between assistance programs to SME’s and employment creation; The employment–stabilizing behavior of SME’s; Job creation and SME’s in Egypt. It is concluded that providing micro-finance to enterprises would be successful in creating employment, raising productivity and eventually developing the workers’ skills

Suggested Citation

  • Alia El Mahdi & Magued Osman, 2003. "An Assessment of the Effectiveness of Small and Micro-Enterprise Finance in Employment Creation," Working Papers 0313, Economic Research Forum, revised 05 Jan 2003.
    • Handle: RePEc:erg:wpaper:0313
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    References listed on IDEAS

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    3. Piet Rietveld & Youdi Schipper, 1997. "Explaining Employment Growth in Small Industrial Enterprises: Does Policy Matter? A Case Study for Central Java," Tinbergen Institute Discussion Papers 97-035/3, Tinbergen Institute.
    4. Davis, Steven J. & Henrekson, Magnus, 1997. "Explaining National Differences in the Size and Industrial Distribution of Employment," Working Paper Series 482, Research Institute of Industrial Economics.
    5. Pernia, Ernesto M. & Pernia, Joseph M., 1986. "An economic and social impact analysis of small industry promotion: A Philippine experience," World Development, Elsevier, vol. 14(5), pages 637-651, May.
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