Sme and Globalization

Topics: Research, Economics, Economy Pages: 8 (2348 words) Published: December 21, 2009
Role of Globalization on SMEs Business in Pakistan
Written By
Sehrish Soomro &
Batool Pirzada
Students of Sukkur Institute Of Science & Tech:
With the profound guidance of
Mr. F.M. Shaikh
Assistant Professor, Department of Agri: Economics


This research explores the impact of globalization on SMEs business in Pakistan. The Small and Medium Scale Enterprises (SMEs) are playing very significant role in almost all the economies around the world irrespective of the countries’ development stage. Most of the developed countries like Japan, China, Malaysia, Taiwan, have developed through SMEs business, in many aspects such as employment generation, export, tax, income, innovation, competitiveness. Recent wave of Globalization has influenced overall business of the world. SMEs grew more in this wave of Globalization. Particularly in Pakistan, there has been a significant impact on income distribution, social stability, domestic resources utilization technique and structural and regional development. There is a wealth of economic evidence that demonstrates that globalization brings great benefits as well as costs. It offers the opportunity for a higher rate of sustainable growth - growth that translates into longer, healthier lives and improved living standards. But, if we look at another side of picture then it has been proven that some of the competitive obstacles often faced by the little fish in the big ocean. Compared to larger firms, small and medium-sized enterprises (SMEs) are generally less well-equipped to face increases in international trade. As a result of their lower productivity, many have found it difficult to compete. Also, given their limited resources, they have found it more difficult to take advantage of the removal of tariff barriers. For this paper, data were collected from 100 SME owners by using random sampling. Questionnaires have been formulated as an instrument for measuring the impact of globalization. It was revealed that overall impact of globalization on SMEs business grew by only 10%, and hampered due to the lack of technology, non-availability of technical labor, government irregularities like loan and other facilities, limited access to credits and markets, lack of infrastructure and competitive threats from foreign products etc. Inspire of assistance offered by successive government in Pakistan, and assistance from Private sector, NGOs and donor agencies; SME sector is still less dynamic and underdeveloped against large scale enterprise in the national economy. It was further revealed that if government takes positive measures then SMEs can grow up to 50% in the Global scenario and export to SMEs increased by 40%.

“Economic Growth is a wild horse; it needs to be tamed to serve the real interests of the society. If the horse misbehaves in some societies, leading to deprivation of many human lives, then the fault is not of the horse but the rider. Economic growth is essential in poor societies — but even more is its structure and distribution.” Dr. Mahbub ul Haq (Late)

Pakistan is a mixed economy consisting of a public sector domination of major sectors of the economy, which is changing very quickly under the free market agenda of WTO making the role of government to minimum level under the globalization policies guided by World Bank and IMF. Today the great challenge facing political leaders is to persuade the public that continuing to liberalize trade will bring more benefits than costs. Distrust of globalization has probably never been higher in the past 60 years. There is widespread fear that globalization means job losses and lower wages as the export power of huge nations grows. The evidence of this situation is Chinese products domination on the Pakistan market which has made many SMEs out of business. So people are becoming more protectionists, more unwilling to deal with change and make adjustments. There are a lot of...

References: Journal article by Pierre-Andre Julien, Andre Joyal, Laurent Deshaies; Journal of Small Business Management, Vol. 32, 1994:
Pakistans Small industries entrepreneurs Gallup/BRB World Bank survey
Small and Medium enterprises development (A recipe For development and just distribution) A research
paper by SMEDA Research cell
Small and medium enterprise development( A visionary action in Saudi Arabia) by Ismail
Radwan & Jamal al-Kibbi( World Bank Institute)
Federal Bureau of Statistics (2004), Economic Census –2000, Pakistan.
Federal Bureau of Statistics Economic Survey 2007–08 Pakistan.
World Bank/SMEDA (2007) Investment Climates Survey, Pakistan.
World Bank (2007) Survey for SMEs Policy Note, Pakistan.
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