Importance Of SME

The term “SME” is commonly used to refer to Small and Medium-sized Enterprises. The term covers a variety of definitions as well as measures. However, in most of the various definitions of what is an SME, employment is the most widely used criterion for categorizing the size of the firm. Moreover, SMEs are often defined as businesses with fewer than 500 employees. However, a number of countries, including some in the European Union use a lower cutoff of 250 employees. SMEs are important in the economy because they have some unique benefits to the economy chief among these being employment and job creation, among others. The following discussion explores the impact of SME to the economy, especially in regards to employment and the creation

SMEs still contribute between 15-50% of exports while a significantly higher percentage of these SMEs are active exporters. As would be expected, however, the likelihood that output is exported is smaller for the small and medium-sized enterprises than for large firms. In general, it is estimated that that SMEs contribute up to 35% of the entire world manufactured direct exports (Hallberg, 2000, pg.23). The information shows that these exports are concentrated around relatively larger SMEs. However, even more important is that most of the growth as demonstrated by the current trend seems to be taking place among smaller SMEs. These exports generate employment and create job opportunities for many people along the export chain either directly or

It has detailed how SMEs offer high percentages of employment opportunities, especially when compared to larger firms in the economy. With all the statistics that have been explored, the SMEs have been noted to offer about two thirds of all employment opportunities available in the economy. The SMEs as outlined are also critical in giving skills to the labor pool. They train and offer other skills that are important to prepare people to work in small, medium, and large enterprises. The 2008 financial crisis dealt a blow to the SMEs especially regarding their growth and expansion, but in todays economy, they have sprung back and are expected to continue playing their vital role of offering employment opportunities. When doing the research for this paper I was very surprised about how much SMEs effect the economy. I always assumed it was just large firms and corporations that contributed to the economic growth, or downfall. I work for a small business and this information has made me appreciate the contributions we make to the economy a great deal more. It is definitely a very complex topic, but worth the outcome considering how much information I