Attaining Inclusive Growth in a Developing Economy on the Wings of Micro, Small and Medium Scale Enterprises
A typical disturbing feature of most developing countries is a sprawling disparity between economic growth as measured by increase in gross domestic product and concrete progress in real welfare of the citizenry measured by standard of living, access to employment and poverty reduction. Contrary to natural logic, available evidence suggests that both variables are inversely related. There is equally a consensus among scholars of inherent potential of micro, small and medium enterprises (MSMEs) as a veritable agency for income and prosperity spread and thus a vehicle for inclusive growth. This paper empirically investigates the nexus between MSMEs and inclusive economic growth. With data ranging from 1980 to 2016, it specifically built econometric model to capture the link between Gini coefficients (proxy for inequality gap) and identified key determinants of viable MSMEs sub-sector: volume of credit to MSMEs, MSMEs’ contribution to national output, lending cost, cost of doing business, and infrastructural financing. With error correction model technique of analysis, findings revealed that MSMEs has the potential to provide growth that will spread prosperity to the majority of citizenry thereby narrowing inequality gap and reducing poverty. The paper recommends policy shift in favour of creating environment to promote the growth of MSMEs.
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