Attaining Inclusive Growth in a Developing Economy on the Wings of Micro, Small and Medium Scale Enterprises
Keywords:
Inclusive-growth; Micro, Small and Medium Enterprises; Interconnectivity, Inequality, Causality, Sustainability.
Abstract
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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References
Abdulrahman, D. H., & Olofin, O. P. (2017). Financial inclusion, small and medium scale enterprises and inclusive economic growth in Nigeria (1990-2015). Journal of Emerging Trends in Economics and Management Sciences , 8 (4): 204 - 214.
accessed August 15, 2019
Adaboh, S., Akpalu, R., Owusu-Darko, I., & Boateng, S. S. (2017). Using Courseware Instruction to Improve Junior High School Students’ Spatial Visualization Skills. International Electronic Journal of Mathematics Education, 12(3), 353-365.
Agbarakwe, H. U. & Anowor, O. F. (2018). Government intervention and economic development: Lessons from Songhai development initiative farm in Rivers State, Nigeria. International Journal of Economics and Financial Research, 4(1): 13-21.
Agwal, P. (2019). What is Economic Growth, INTELLIGENT ECONOMIST, https://www.intelligenteconomist.com/economic-growth/ accessed August 15, 2019
Ajide, K. B. (2014). Determinants of Economic Growth in Nigeria, CBN Journal of Applied Statistics, 5 (2): 147-170.
Aleksey, P. and Yuner, K. (2015). Economic Growth: Types and Factors, International Conference on Euroasian Economies, 62 – 66
Anowor, O. F., Ukwueni, N. O., Ezekwem, O. S. & Ibiam, F. O. (2013). Foreign direct investment and manufacturing sector growth in Nigeria. International Journal of Advanced Scientific and Technical Research, 3(5): 231–254.
Aoyagi, Chie and Ganelli, Giovanni (2015). Asia’s Quest for Inclusive Growth Revisited, IMF Working Paper WP/15/42
Asikhia, O. (2010), SMEs and poverty alleviation in Nigeria: Marketing resources and capabilities implications, New England Journal of Entrepreneurship, 13 (2): 57-70.
Betz, M. R., Partridge, M. D., Farren, M., & Lobao, L. (2015). Coal Mining, Economic Development, & the Natural Resources Curse. Energy Economics, 50 (1), 105 – 116
Bhattacharyya, S & Hodler, R (2014),. Do natural resource revenues hinder financial development? The role of political institutions. World Development, 57(1), 101-113
Box, G. E. P. and Cox, D. R., (1964). An analysis of transformations, Journal of the Royal Statistical Society, 26 (1): 211-252
Deaton, A. (2005), “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World), Review of Economics and Statistics 87: 353-378.
Edom, G.O., Inah, E.U. & Emori, E.G. (2015). Small and medium enterprises financing and poverty reduction in Nigeria: an empirical analysis. Journal of Economics and Sustainable Development, 6 (11): 91-100.
Egwaikhide, F. O. (2012). The impact of foreign Direct Investment on Nigeria’s Economic Growth: 1980-2007: Evidence from the Johansen’s cointegration Approach. International Journal of business and social services 3(6):112-118.
Eniola, A. A. (2014). The role of SME firms’ performance in Nigeria. Arabian Journal of Business and Management Review (OMAN Chapter), 3 (12): 33-47
Feeder, G. (1983). On Export and Economic Growth, Journal of Development Economics 12: 59 – 74.
Felife, J. (2012) Inclusive Growth: Why it is important for developing Asia. In CADMUS Journal. At http://www.cadmusjournal.org/node/148 1(4). Accessed 3rd October, 2018.
Fosu, A. K. (1990). Exports and Economic Growth. The African Case, World Development. 18 (6): 831 – 825.
https://www.econlib.org/library/Topics/College/economicgrowth.html
Hu, M-W. (2010). SMEs and economic growth: Entrepreneurship or employment. ICIC Express Letters, 4(6): 2275-2280.
Ibor, B.I., Offiong, A. I. & Mendie, E. S. (2017). Financial inclusion and performance of micro, small and medium scale enterprises in Nigeria. International Journal of Research -GRANTAALAYAH, 15(3): 104-122
John-Akamelu, C.R.& Muogbo, U.S.(2018). Role of small & medium enterprises in poverty eradication in Nigeria. European Journal of Research and Reflection in Management Sciences 6(2): 33-48.
Kachembere, J. (2011). SMEs hold key to economic growth. Available at http://www.thestandard.co.zw/business/32203-smes-hold-key-to-economicgrowth.html (accessed 3rd October, 2018).
Kazeem, Yomi (2018), Nigeria has the largest extreme poverty population. Available at https://www.theatlas.com/charts/Hynnu6C-7
Kord, H., Noushiravani, Y., Bahadori, M. D., & Jahantigh, M. (2017). Review and Analysis of Telework Perspective in the Administrative Systems. Dutch Journal of Finance and Management, 1(2), 44. https://doi.org/10.29333/djfm/5820
Layson, S., (1983). Homicide and Deterrence: Another View of the Canadian Time Series Evidence, Canadian Journal of Economics, 16(1): 52-73.
McKinley, Terry (2010). Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress, Asian Development Bank (ADB) Sustainable Development Working Paper Series No. 14
Mukhtari, M.O. (2017). Delivering inclusive growth for economic development in Nigeria. International Journal of Entrepreneurial Development, Education and Science Research , 4(1): 209-217
Oba, U.O.& Onuoha, B.C. (2013). The role of small and medium scale enterprises in poverty reduction in Nigeria: 2001 – 2011. An International Multidisciplinary Journal, Ethiopia (7)4, Serial No. 31, 1-25.
Obwona, M. B. (2011). Determinants of Foreign Direct Investment and their Impact on Economic Growth in Uganda, African Development Review, 13 (1): 46 – 81.
OECD (2012). Promoting inclusive growth: Challenges and policies. OECD, Paris. Available from: https://0x9.me/OZrzH [Accessed 24th September 2018].
OECD (2017). Inclusive Growth. President Muhammadu Buhari. 2016 budget of Change in Nigeria. At http://www.oecd.org. Accessed on 24th September 2018.
Ogbu, O. (2012). Toward inclusive growth in Nigeria. Global Economy and Development: Policy paper 2012. At https://www.brookings.edu/research/toward-inclusive-growth-in-nigeria/
Ogujiuba, K. K. & Alehile, K. (2011). Inclusive growth in Nigeria: Policy issues and options for poverty reduction. International Journal of Social and Economic Research, 1(1): 71-82.
Olowe, F.T, Moradeyo, O.A. & Babalola, A.T. (2013). Empirical study of the impact of microfinance banks on SMEs growth in Nigeria. International Journal of Academic Research in Economic and Management Sciences, 2(6): 116 -127.
Oluwasogo, A. S., Oduntan, E. & Oluwatoyin, M. (2017). Financial development and inclusive growth in Nigeria: a multivariate approach. Journal of Internet Banking and Commerce, 22 (S8): 1- 14
Oni, O. E., Oni, O.A. & Daniya, A.A. (2012) Development of small and medium scale enterprises: The Role of government and other financial institutions. Arabian Journal of Business and Management Review (OMAN Chapter), 7(1): 16-29
Onodugo, V. A., Anowor, O. F., Ukwueni, N. O., & Ibiam, F. O. (2014). Bank Credit and Private Sector Investment: Evidence from Nigeria. International Journal of Management Science, 3(2): 82-92
Onodugo, V. A., Ikpe, M. & Anowor, O. F. (2013). Non-Oil Export and Economic Growth in Nigeria: A Time Series Econometric Model. International Journal of Business Management & Research. 3 (2): 115 - 124.
Onodugo, V. A., Kalu, I. E. & Anowor, O. F. (2013a). An empirical analysis of the impact of investment in human capital on Nigerian Economy. PARIPEX– Indian Journal of Research. 2 (4): 336 -339
Onodugo, V. A., Kalu, I. E. & Anowor, O. F. (2013b). Financial intermediation and private sector investment in Nigeria. Research Journal of Finance and Accounting. 4 (12): 47–54
Onodugo, V. A., Obi, K. O., Anowor, O. F., Nwonye, N. G., & Ofoegbu, G. N. (2017). Does public spending affect unemployment in an emerging market? Risk governance & control: Financial markets & institutions, 7(1), 32-40. http://dx.doi.org/10.22495/rgcv7i1art4
Oyelaran-Oyeyinka, Banji (2017). SME: Issues, Challenges and Prospects, FSS 2020 International Conference https://www.cbn.gov.ng/fss/wed/SME_Issues,%20Challenges%20and%20Prospects_Oyeyinka%20Banji.pdf
Paloma Durán (2015). What does inclusive economic growth actually mean in practice? https://www.undp.org/content/undp/en/home/blog/2015/7/31/What-does-inclusive-economic-growth-actually-mean-in-practice-/
Pandya, V. M. (2012). Comparative analysis of development of SMEs in developed and developing countries. Available at http:// www.researchgate.net/publication/266594413 (Accessed 3/10/2018)
Romer, P. (2018). Economic Growth, The Library of Economics and Liberty, available at
Rutendo, T. (2016). An investigation into the challenges faced by Small to Medium Enterprises in Zimbabwe: A case of Gazaland Market. IOSR Journal of Business and Management, 18(9): 148-153
Shahbaz, M., Shabbir M. S., & Butt M. S. (2011). Effect of financial development on agricultural growth in Pakistan: new extensions from bounds test to level relationships and Granger causality tests. Online at https://mpra.ub.uni-muenchen.de/34162/1/MPRA_paper_34162.pdf
SMIEIS (2005). Prospects of Nigerian SMEs under the small and medium industries equity investment scheme. Available: http://www.nigeriabusinessinfo.com/news Accessed on 3rd October 2018
Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly Journal of Economics, 70(1): 65–94.
Tambunan, T. (2008). Development of SME in ASEAN with Reference to Indonesia and Thailand, Chulalongkorn Journal of Economics, 20(1): 53-83
United Nations Development Programme (2017). UNDP’s Strategy for Inclusive and Sustainable Growth, available at https://www.undp.org/content/undp/en/home/librarypage/poverty-reduction/undp_s-strategy-for-inclusive-and-sustainable-growth.html accessed August 15, 2019
Van den Berg, Hendrik (2017). Economic Growth And Development: 3rd Edition Published by Mc-Graw Hill/Irwin, https://tonettebq.firebaseapp.com/bs362/economic-growth-and-development-3rd-edition-by-hendrik-van-den-berg-9814733334.pdf
World Bank (2013). Micro and Rural Finance in Ghana: Evolving Industry and Approaches to Regulation Findings. Washington, D.C.: The World Bank.
World Bank (2017). World development indicator database. Available: http://worldbank.org/website/external/datastatistics (Accessed Oct 3rd, 2018).
World_Bank. (2017). World Development Review. Washington: World Bank.
accessed August 15, 2019
Adaboh, S., Akpalu, R., Owusu-Darko, I., & Boateng, S. S. (2017). Using Courseware Instruction to Improve Junior High School Students’ Spatial Visualization Skills. International Electronic Journal of Mathematics Education, 12(3), 353-365.
Agbarakwe, H. U. & Anowor, O. F. (2018). Government intervention and economic development: Lessons from Songhai development initiative farm in Rivers State, Nigeria. International Journal of Economics and Financial Research, 4(1): 13-21.
Agwal, P. (2019). What is Economic Growth, INTELLIGENT ECONOMIST, https://www.intelligenteconomist.com/economic-growth/ accessed August 15, 2019
Ajide, K. B. (2014). Determinants of Economic Growth in Nigeria, CBN Journal of Applied Statistics, 5 (2): 147-170.
Aleksey, P. and Yuner, K. (2015). Economic Growth: Types and Factors, International Conference on Euroasian Economies, 62 – 66
Anowor, O. F., Ukwueni, N. O., Ezekwem, O. S. & Ibiam, F. O. (2013). Foreign direct investment and manufacturing sector growth in Nigeria. International Journal of Advanced Scientific and Technical Research, 3(5): 231–254.
Aoyagi, Chie and Ganelli, Giovanni (2015). Asia’s Quest for Inclusive Growth Revisited, IMF Working Paper WP/15/42
Asikhia, O. (2010), SMEs and poverty alleviation in Nigeria: Marketing resources and capabilities implications, New England Journal of Entrepreneurship, 13 (2): 57-70.
Betz, M. R., Partridge, M. D., Farren, M., & Lobao, L. (2015). Coal Mining, Economic Development, & the Natural Resources Curse. Energy Economics, 50 (1), 105 – 116
Bhattacharyya, S & Hodler, R (2014),. Do natural resource revenues hinder financial development? The role of political institutions. World Development, 57(1), 101-113
Box, G. E. P. and Cox, D. R., (1964). An analysis of transformations, Journal of the Royal Statistical Society, 26 (1): 211-252
Deaton, A. (2005), “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World), Review of Economics and Statistics 87: 353-378.
Edom, G.O., Inah, E.U. & Emori, E.G. (2015). Small and medium enterprises financing and poverty reduction in Nigeria: an empirical analysis. Journal of Economics and Sustainable Development, 6 (11): 91-100.
Egwaikhide, F. O. (2012). The impact of foreign Direct Investment on Nigeria’s Economic Growth: 1980-2007: Evidence from the Johansen’s cointegration Approach. International Journal of business and social services 3(6):112-118.
Eniola, A. A. (2014). The role of SME firms’ performance in Nigeria. Arabian Journal of Business and Management Review (OMAN Chapter), 3 (12): 33-47
Feeder, G. (1983). On Export and Economic Growth, Journal of Development Economics 12: 59 – 74.
Felife, J. (2012) Inclusive Growth: Why it is important for developing Asia. In CADMUS Journal. At http://www.cadmusjournal.org/node/148 1(4). Accessed 3rd October, 2018.
Fosu, A. K. (1990). Exports and Economic Growth. The African Case, World Development. 18 (6): 831 – 825.
https://www.econlib.org/library/Topics/College/economicgrowth.html
Hu, M-W. (2010). SMEs and economic growth: Entrepreneurship or employment. ICIC Express Letters, 4(6): 2275-2280.
Ibor, B.I., Offiong, A. I. & Mendie, E. S. (2017). Financial inclusion and performance of micro, small and medium scale enterprises in Nigeria. International Journal of Research -GRANTAALAYAH, 15(3): 104-122
John-Akamelu, C.R.& Muogbo, U.S.(2018). Role of small & medium enterprises in poverty eradication in Nigeria. European Journal of Research and Reflection in Management Sciences 6(2): 33-48.
Kachembere, J. (2011). SMEs hold key to economic growth. Available at http://www.thestandard.co.zw/business/32203-smes-hold-key-to-economicgrowth.html (accessed 3rd October, 2018).
Kazeem, Yomi (2018), Nigeria has the largest extreme poverty population. Available at https://www.theatlas.com/charts/Hynnu6C-7
Kord, H., Noushiravani, Y., Bahadori, M. D., & Jahantigh, M. (2017). Review and Analysis of Telework Perspective in the Administrative Systems. Dutch Journal of Finance and Management, 1(2), 44. https://doi.org/10.29333/djfm/5820
Layson, S., (1983). Homicide and Deterrence: Another View of the Canadian Time Series Evidence, Canadian Journal of Economics, 16(1): 52-73.
McKinley, Terry (2010). Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress, Asian Development Bank (ADB) Sustainable Development Working Paper Series No. 14
Mukhtari, M.O. (2017). Delivering inclusive growth for economic development in Nigeria. International Journal of Entrepreneurial Development, Education and Science Research , 4(1): 209-217
Oba, U.O.& Onuoha, B.C. (2013). The role of small and medium scale enterprises in poverty reduction in Nigeria: 2001 – 2011. An International Multidisciplinary Journal, Ethiopia (7)4, Serial No. 31, 1-25.
Obwona, M. B. (2011). Determinants of Foreign Direct Investment and their Impact on Economic Growth in Uganda, African Development Review, 13 (1): 46 – 81.
OECD (2012). Promoting inclusive growth: Challenges and policies. OECD, Paris. Available from: https://0x9.me/OZrzH [Accessed 24th September 2018].
OECD (2017). Inclusive Growth. President Muhammadu Buhari. 2016 budget of Change in Nigeria. At http://www.oecd.org. Accessed on 24th September 2018.
Ogbu, O. (2012). Toward inclusive growth in Nigeria. Global Economy and Development: Policy paper 2012. At https://www.brookings.edu/research/toward-inclusive-growth-in-nigeria/
Ogujiuba, K. K. & Alehile, K. (2011). Inclusive growth in Nigeria: Policy issues and options for poverty reduction. International Journal of Social and Economic Research, 1(1): 71-82.
Olowe, F.T, Moradeyo, O.A. & Babalola, A.T. (2013). Empirical study of the impact of microfinance banks on SMEs growth in Nigeria. International Journal of Academic Research in Economic and Management Sciences, 2(6): 116 -127.
Oluwasogo, A. S., Oduntan, E. & Oluwatoyin, M. (2017). Financial development and inclusive growth in Nigeria: a multivariate approach. Journal of Internet Banking and Commerce, 22 (S8): 1- 14
Oni, O. E., Oni, O.A. & Daniya, A.A. (2012) Development of small and medium scale enterprises: The Role of government and other financial institutions. Arabian Journal of Business and Management Review (OMAN Chapter), 7(1): 16-29
Onodugo, V. A., Anowor, O. F., Ukwueni, N. O., & Ibiam, F. O. (2014). Bank Credit and Private Sector Investment: Evidence from Nigeria. International Journal of Management Science, 3(2): 82-92
Onodugo, V. A., Ikpe, M. & Anowor, O. F. (2013). Non-Oil Export and Economic Growth in Nigeria: A Time Series Econometric Model. International Journal of Business Management & Research. 3 (2): 115 - 124.
Onodugo, V. A., Kalu, I. E. & Anowor, O. F. (2013a). An empirical analysis of the impact of investment in human capital on Nigerian Economy. PARIPEX– Indian Journal of Research. 2 (4): 336 -339
Onodugo, V. A., Kalu, I. E. & Anowor, O. F. (2013b). Financial intermediation and private sector investment in Nigeria. Research Journal of Finance and Accounting. 4 (12): 47–54
Onodugo, V. A., Obi, K. O., Anowor, O. F., Nwonye, N. G., & Ofoegbu, G. N. (2017). Does public spending affect unemployment in an emerging market? Risk governance & control: Financial markets & institutions, 7(1), 32-40. http://dx.doi.org/10.22495/rgcv7i1art4
Oyelaran-Oyeyinka, Banji (2017). SME: Issues, Challenges and Prospects, FSS 2020 International Conference https://www.cbn.gov.ng/fss/wed/SME_Issues,%20Challenges%20and%20Prospects_Oyeyinka%20Banji.pdf
Paloma Durán (2015). What does inclusive economic growth actually mean in practice? https://www.undp.org/content/undp/en/home/blog/2015/7/31/What-does-inclusive-economic-growth-actually-mean-in-practice-/
Pandya, V. M. (2012). Comparative analysis of development of SMEs in developed and developing countries. Available at http:// www.researchgate.net/publication/266594413 (Accessed 3/10/2018)
Romer, P. (2018). Economic Growth, The Library of Economics and Liberty, available at
Rutendo, T. (2016). An investigation into the challenges faced by Small to Medium Enterprises in Zimbabwe: A case of Gazaland Market. IOSR Journal of Business and Management, 18(9): 148-153
Shahbaz, M., Shabbir M. S., & Butt M. S. (2011). Effect of financial development on agricultural growth in Pakistan: new extensions from bounds test to level relationships and Granger causality tests. Online at https://mpra.ub.uni-muenchen.de/34162/1/MPRA_paper_34162.pdf
SMIEIS (2005). Prospects of Nigerian SMEs under the small and medium industries equity investment scheme. Available: http://www.nigeriabusinessinfo.com/news Accessed on 3rd October 2018
Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly Journal of Economics, 70(1): 65–94.
Tambunan, T. (2008). Development of SME in ASEAN with Reference to Indonesia and Thailand, Chulalongkorn Journal of Economics, 20(1): 53-83
United Nations Development Programme (2017). UNDP’s Strategy for Inclusive and Sustainable Growth, available at https://www.undp.org/content/undp/en/home/librarypage/poverty-reduction/undp_s-strategy-for-inclusive-and-sustainable-growth.html accessed August 15, 2019
Van den Berg, Hendrik (2017). Economic Growth And Development: 3rd Edition Published by Mc-Graw Hill/Irwin, https://tonettebq.firebaseapp.com/bs362/economic-growth-and-development-3rd-edition-by-hendrik-van-den-berg-9814733334.pdf
World Bank (2013). Micro and Rural Finance in Ghana: Evolving Industry and Approaches to Regulation Findings. Washington, D.C.: The World Bank.
World Bank (2017). World development indicator database. Available: http://worldbank.org/website/external/datastatistics (Accessed Oct 3rd, 2018).
World_Bank. (2017). World Development Review. Washington: World Bank.
Published
2019-11-21
How to Cite
Onodugo, V., Nwonye, N., Anowor, O., & Ofoegbu, G. (2019). Attaining Inclusive Growth in a Developing Economy on the Wings of Micro, Small and Medium Scale Enterprises. Amazonia Investiga, 8(24), 239-252. Retrieved from https://amazoniainvestiga.info/index.php/amazonia/article/view/977
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