SME Development: Government Procurement and Inclusive Growth

Abstract

Despite the Asia and Pacific region’s unprecedented economic success and poverty reduction, income inequality is widening. Economic data suggests that a significant number of Asian countries have experienced increased income inequality over the past 2 decades. Small and medium size enterprises (SMEs) can play a major role in closing this divide. According to the SME Finance Forum, they are crucial for growth and job creation, accounting for nearly 86% of employment opportunities in developing countries. SMEs are seen to reduce income concentration with a disproportionate impact on minority or poor populations. Earlier World Bank estimates suggest that SMEs in the People’s Republic of China (PRC) account for 99.9% of the total number of businesses, employ 84% of the nation’s workforce, and account for 71% of total sales.