The Impact of Small and Medium-Sized Enterprises on Economic Growth in Iran

Abstract

In the aftermath of the global financial crisis of 2008-2009, there has been an increased interest in the role of small and medium enterprises in job creation and economic growth. Changing industrial structures of developing economies in recent decades, the development of small and medium-sized enterprises (SMEs) were playing a critical role in industrial development strategies of countries. Regarding the successful experience of newly developed economies, economists believe that private sector, particularly SMEs, is a significant factor in economic growth in developing countries. Researches show that these industries affect economic growth by entrepreneurship, innovation, and creating new job opportunities. As a result, SMEs have been concentrated in Iran in order to develop employment-making activities. This research study the relationship between SMEs and economic growth in Iran provinces by using mixed data during 2004-2005 in the framework of augmented Solo growth model, and panel data method. Results show a positive and significant relationship between developing SMEs and economic growth, which indicates the importance of SMEs