Pro-poor economic growth: Role of small and medium sized enterprises

Abstract

Trapped by poverty, many developing countries have adopted various poverty-mitigating programs for development. Traditionally, these programs have been financed through development aid. Economic objectives of many developing countries, however, go beyond poverty reduction, and include accelerated growth (and wealth creation). Simultaneously, achieving this twin objective without infringing pro-poor aid conditionalities has created a new college of development. While acknowledging the importance of aid in fighting poverty, this paper develops a framework – in theory and practice – that illustrates how Small and Medium Enterprises (SMEs) offer sustainable business solutions that simultaneously fight poverty and accelerate economic growth.