Evaluation of Access to Finance, Training, and Government Policies on Entrepreneurial Development and Small Business Sustainability (Center for Management Science Research)

Summary

• Small and medium-sized enterprises provide up to 78% of non-agricultural employment in emerging economies, though more than 30% fail within their first three years.p.2
• The financing gap for SMEs in emerging and developing economies often reaches nearly 20% of GDP due to high transaction costs and collateral deficits.p.3
• Longitudinal experiments involving over 500 small business owners in Lahore showed Action-Oriented Psychological Training Programs significantly improve career resilience.p.5
• In Pakistan, SMEs generate ~30% of GDP and 25% of exports but face 12 procedures taking an average of 155 days for business registration.p.6
• Pakistan's SME facilitation spending is estimated at $1.74 million, compared to $109 million in India and $3.49 billion in Korea.p.6
• Digitally transformed SMEs achieved a 64% survival rate during the COVID-19 pandemic.p.7

Key insights

1. Small businesses account for up to 78% of non-agricultural employment in emerging markets but face a 30% failure rate in their first three years.p.2
2. Information asymmetry and high fixed transaction costs contribute to an SME financing gap of nearly 20% of GDP in developing economies.p.3
3. Action-oriented training programs evaluated on 500 small business owners in Lahore led to significant improvements in entrepreneurial resilience.p.5
4. Pakistan's National SME Policy 2021 set turnover definitions for small enterprises at PKR 150 million and medium enterprises at PKR 800 million.p.6
5. High administrative barriers in Pakistan require SMEs to complete 12 registration procedures over an average of 155 days.p.6
6. Direct spending on SME facilitation in Pakistan reaches $1.74 million, compared to $109 million in India and $3.49 billion in South Korea.p.6
7. Digitally integrated SMEs demonstrated a 64% survival rate during COVID-19 market disruptions.p.7