Entrepreneurship is becoming of vital importance in the economies like Pakistan. Entrepreneurship is strongly related to small medium enterprise (SME), which is considered to be the main developing force of the developing economies market.
Previously many economists believed that it is the large firm which contributes in the developing of economies and attracts foreign exchange in the country. But there point of view changed when countries like Taiwan, Japan, and Korea established their economies on the bases of SMEs. These economies build up from grass root level to the heights of success.
According to Schapper (2006), in developing nations more than 90% of the firms ...view middle of the document...
Like Mill, Marshall believed that the skills associated with entrepreneurship are rare and limited in supply and are "so great and so numerous that very few people can exhibit them all in a very high degree”.
Pakistan: A Socioeconomic Overview
Pakistan is gifted by nature with great natural and human resources. Unfortunately however, despite fifty years of independence, Pakistan stands today as one of the poorest nations in the world, and also ranks very low in the socioeconomic terms. The following section briefly summarizes Pakistan in terms of its national resources and socioeconomic standing.
Pakistan has a population exceeding 145 million people, with an annual growth rate of 2.16. Of the total population, 51.9% are males and 48.1 females. Pakistan remains, mainly an agricultural country, with 66.5% rural population.
Due to poor health conditions, our infant mortality2 rate ranks very high in the world (Pakistan: 78.52; Bangladesh: 68.05; India: 61.47; Iran: 28.07; Malaysia: 19.66).
More than half of the population is illiterate. The rate of literacy stands as low as 43.92, with only 32.02 females literate.
The total labor force participation is rated at 29% (crude rate), which includes only 9.3% females, and total rate of unemployment approximates 7.8% (1999-2000).
Pakistan is a mixed economy in which the state-owned enterprises (including industrial corporations, trading houses, banks, insurance companies, hospitals, etc.) account for nearly half of the gross national product (GNP).
Agriculture although still the largest sector, now contributes less than one-fourth of the GNP, while manufacturing provides almost one-fifth.
Pakistan, GDP per capita is 1,275.30 USD (2013).
Today SMEs are widely regarded by experts as the panacea for many economic problems confronting the LDCs. In particular, vibrant small-scale sector—incorporating the informal firms—is expected to solve a variety of problems, including unemployment, low growth and poverty. SAARC region countries too have designed policies for the promotion of this sector, though with uneven results. Yet their faith in SMEs is ever growing. The planners now realize that since the modern production methods are generally more flexible, so manufacturing can be undertaken anywhere, and at any level through inter-firm linkages. At the same time individual country experiences in the SAARC region, and also in other parts of the world, indicate that the real catalyst for the SMEs growth is the general economic environment born of a pro-active industrial policy.
For a longtime the mainstay of Pakistan’s industrialization strategy was large scale manufacturing which recorded 8.78% growth rate during 1950-2003 as it was consistently supported by a set of macroeconomic policy measures. The small-scale sector too registered an impressive growth rate of 5.06% during 1950-2003 and that too without benefiting directly from policy support.