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The ‘Missing Middle’: A Historical-Institutional Perspective on the Stagnation of Small and Medium Enterprises in Turkey

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  • Seven Ağır

    (Department of Economics, Middle East Technical University, Ankara, Turkey)

Abstract

The small and medium-sized enterprises might play an essential role in the economy of a developing country. Yet, in developing countries, relatively fewer firms have been able to transition from micro enterprises focusing on survival to small and medium enterprises with higher capacity for innovation and job creation. This problem of the ‘missing middle’ has been identified as one of the barriers to increasing economic prosperity and therefore the ‘reasons’ underlying it have been examined in studies on various parts of the developing world. This study examines the ‘missing middle’ problem from a historical-institutional perspective by focusing on the underutilization of a novel form of business organization, i.e., PLLC in Turkey. Based upon a novel dataset of firm creation and desk research on legal changes in Turkey during 1957-1994, the study demonstrates the ‘missing’ PLLCs and discuss the potential factors underlying legal stagnation.

Suggested Citation

  • Seven Ağır, 2023. "The ‘Missing Middle’: A Historical-Institutional Perspective on the Stagnation of Small and Medium Enterprises in Turkey," ERC Working Papers 2305, ERC - Economic Research Center, Middle East Technical University, revised Nov 2023.
    • Handle: RePEc:met:wpaper:2305
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    References listed on IDEAS

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