Impact of Small and Medium Enterprises SMEs on Rural Development in Sindh

This research investigates the impact of Small and Medium enterprises (SME’s) in economic development in general and with reference to Rural Development, in particular, to analyze the export potential of Pakistani’s SME’s and its impact on the economy of Pakistan. Data were collected from 100 SMEs business exports in Pakistan by using simple random technique and Structural questionnaire is the basic tool for measuring export potential. Data from developing countries were collected through secondary sources and data were analysis by using Gen-Stat-statistical software. The response rate was 90% 180 samples were responded in this research. Gen-Stat statistical software has been used to analyses the data. It was revealed that the export potential of SME’s in Pakistan is much better than among third world countries but compare to developing world we are bit slow in developing export markets in the world. The strategic planning and resources should be needed for increasing export through SME’s. The results showed that Pakistani’ SME’s using only small portion in the export of the SME’s products where as other developing countries like Malaysia, Thialand, Japan they develop their economy through SME’s. A survey was conducted in various districted of Pakistan and specially 60% from the interior Sindh province. Sample size was 200 and using simple random technique. The growth of SME in Pakistan is increasing in last decades and especially in the interior Sindh the women’s are more actively participate in developing Small and Medium Enterprises business in Sindh. It was revealed the Government and private sector should encourage women’s to participate more in developing SMEs in various parts of Pakistan.


Introduction
Pakistan is the seventh largest population in the world and one of the dense populated country in the world.Pakistan is recently facing lot of problems like unemployment, and slow growth in Agriculture we imported different agriculture related product from the world.Therefore, we have to look at sectors of the economy that have the potential to provide this employment, and simultaneously we have to ensure that the young are provided quality education and training for these more productive sectors of the economy.The greater growth potential lies in the modern high technology industries but it is also present in the labor-intensive industries of the traditional Small Enterprise sector and in the services that support it."Young people in the future are more likely to end (therefore) should be working in organizations closer to the entrepreneurial mode" (Allan Gibbs).
It is a worldwide phenomenon that Small Enterprises are an important part of a nation's economic and social structure."Enterprise is the antithesis of command and control".On a global perspective Small Enterprises have acquired a significant stature in the economic development of a country.Globalization has put Small Enterprises directly in the limelight.Small Enterprises are increasingly a major force for national economic growth.The entrepreneurs who drive them are receiving serious attention from economists, planners, multilateral agencies and governments all over the world ( Carter,Camille. 1999).

Creating Socio-Economic Harmony
Undoubtedly SME's have a significant contribution to make to our economy.In the contemporary environment there are multidimensional and international pressures on SME's to perform effectively and efficiently.The free forces of the market have a tendency to create social and economic imbalances.It is expected that SME's will help to create a balance in ownership and across regions.SME's provide an economic force that will be able to harness available resources and utilize these most efficiently for the betterment of society (Hannah Galvin).
Whereas, the wave of western technology swept aside local skills, appropriate technology, herbal medicines, natural environment and conventional wisdom, SME's have the potential and the capacity to re-harness these and bring them back into the main stream of the economy.SME's can give personalized service and create customer satisfaction.SME's can cater to the niche markets and break the mass production barriers by catering to the smaller production economy.
Increasing pressures brought on by globalization through product or technology obsolescence, information and communication, technology and flow of capital and assets have created the environment for rapid change.This change can be seen in the realignments and creation of strategic alliances, sub-contracting, private public partnerships, deregulation, and privatization; all of which are now recognized as the reasons behind the emerging small enterprise force for socio-economic harmony.

The Emergence of the Small Enterprise Force
We need to look into some of the factors that have fostered the emergence of SME's.Our understanding of free markets leads us to believe that privatization must be carried out because the market is the more efficient guide to decision making.Government interference is generally inefficient.Our observation tells us that only private enterprise can be relied upon to innovate, to satisfy customers and to produce efficiently.
By the beginning of the nineties the move back to the market based policies and reforms had been accepted globally.Privatization brought with it the techniques of writing off past debts, allocating shares to workers, splitting monopolies, unbundling and creating space and leaving only those core functions to survive that could be sustained by the markets.This generally required downsizing, setting up SME's and creating laws and regulatory measures to cope with the phenomena.It invigorated the ailing economies of the 1980s and thus reinforced the confidence in the market economy.
The growth of SME's cannot be explained by any single ideology (e.g.Thatcherism).Alan Gibbs attributes this phenomena's growth partly to the growth of the service sector and the boom in the information communication technology.Evidence from a cross section of countries from Europe and Asia supports this observation.
Going international" used to be the domain of large firms only but this is no longer so today.Small and Medium-sized enterprises (SME's) that makeup the small industry sector are beginning to penetrate the international market.Going international has allowed SME's to tap new markets, overcome domestic constraints, and keep abreast of new trends in technology.However, these firms do face problems when venturing into foreign markets.These include different languages and cultures, disparate business environments, entry barriers, limited financial resources, lack of marketing information and skills, lack of supportive government policies for small industry, lack of good distribution networks and mental blocks.(Ho Lin Hoon)

Export Assistance Programs
There is a need to come out of the export awareness program syndrome.Up gradations of training programs are required.These programs must be designed around the growing need to understand markets and the WTO implication.Repeating the some programs over and over again is shear waste.Export education and assistance are offered to companies through numerous public private sector programs the effectiveness of such program is reduced because of unnecessary duplication of efforts.Often the credibility of such Program may be perceived by companies to be limited because of their nature e.g.narrow in coverage or not rigorous enough.Similarly coordination between various government agencies in ex-assistance is needed.A healthy partnership must be sought with education institutions, trade associations, chambers of commerce, world trade clubs, business development centers and other groups.SMEs has not always enthusiastically sought out assistance from agencies.
The perceived credibility of the agency has been the barrier.Often when SMEs do not view agencies as providing practical and affordable assistance and prescripts in an effective and timely manner, they have been reluctant to approach them..

SME Development in Turkey and Modalities of Intervention as was the practice of most countries;
Turkey also practiced a state directed economy from its inception 1923.Hoping to achieve rapid industrialization it followed import substitution policy and relied on State Economic Enterprises, because it was the common belief that economic growth depended on heavy investment in large, capital-intensive industrial projects.Not withstanding the imbalance of such a policy there was considerable growth of approximately 7% per annum.However true to the world pattern the growth declined in the 1970s and a new trend emerged in the 1980s.It was the trend based on free market economy and hence structural reforms were undertaken to give the economy a new shape.

Data Collection and Research Methodology
Data were collected from 100 SMEs business exports in Pakistan by using simple random technique and Structural questionnaire is the basic tool for measuring export potential.Data from developing countries were collected through secondary sources and data were analysis by using Gen-Stat-statistical software.

Conclusion
The current research highlighted the SMEs business growth and rural development of Sindh.SMEs are the only source of more than 14% of earnings in rural Sindh.This paper has examined the set of policy and strategy alternative for the support of SME's export business in Pakistan and comparison with under developing countries.
The Exports are increased through SME specially in the Year 1999-2000.The employment increased in Pakistan as well as in the Sindh that lead to poverty reduction.By primary research we got result that Still there are problems faced by the exporters if they can be solved the export increased to 60% more.In the comparison of other Asian like Japan and Thailand where most of their development progress through SME's.So we will utilize all the possibilities of export different SME's product to the Asian as well develop countries to increase the export as well as strengthening the economy of Pakistan.Globalization has open the windows for the Global SMEs business growth.

Recommendations
The overall in-depth sample showed a high degree of concern over economic problems but that concern did vary.
The constraint which was most uniformly faced was political instability followed by (the related constraint) uncertainty in the business climate.Those in Sindh were significantly more concerned about their lack of information on their competition and about the lack of market for their products than their peers in Punjab or NWFP.Even more dramatically, all those interviewed in Sindh were severely threatened by uncertainty in the business climate and by climatic disasters while their colleagues elsewhere were much less likely to rank these as serious constraints.More than 80% of them thought that government corruption was serious problem for them as well.
They did not perceive that there was increasing credit available inspite of SMEDA or SBFC or that the government had begun to be interested in their welfare and had begun to devise policies to support them.More than half the respondent entrepreneurs thought that government support had substantially decreased.
Entrepreneurs' concern regarding the changes in Government policies and taxes.What may be seen by economists as having positive effects on SMEs may not be equally valued by entrepreneurs.Thus, most responded strongly that government taxing and pricing policies were serious constraints to their establishments.Very few (12% of the entire set of respondents) felt that government support had increased and in fact, more than 70% felt it had decreased substantially.Entrepreneurs in all provinces share a grave concern about the lack of credit and the conditions required for obtaining what credit there is.Few responded "do not know" to any questions and few took the lukewarm options.Most felt strongly about what they wanted and needed for their businesses.

Figures in
The sources of the data are various issues of Economic Survey of Pakistan, database of Small & Medium Enterprises (SMEDA), publication of International Trade Centre (ITC), annual reports of State bank of Pakistan, database of Trade Development Authority of Pakistan (TDAP), publications and databases of Federal Bureau of Statistics, trade polices from Ministry of Commerce of Pakistan, databases of Ministry of Finance, etc. Literature covers the research papers and studies available on the subject on internet and journals and libraries.The study is an attempt to present comparative analysis of the various SME based economies in the world specifically from Asia.
6.1 Leather Industry(Finished Leather, 2002)stated that world's leading exporters of finished leather were Italy, Republic of Korea, Argentina, USA, Germany and Brazil.Further, Hong Kong, Italy, Germany, Spain and France were important buyers of finished leather fromPakistan in 2002.During 2002, Kasur (223)was main cluster city of finished leather in Pakistan followed by Sialkot (210), Karachi (174), Gujranwala (51), Multan (43), Sheikhupura (28), Lahore (15), Sahiwal (8), Faisalabad (7), Peshawar (6), Sargodha (5) etc.Following Tableshows exportof Leather Products during 2001-06.Export of leather Tanned shows variation during 2001-06 as shown in Figure.Exports of leather tanned decreases from US$ 239,934 thousand in 2001-02 to US$ 234,774 thousand in 2002-03 showing fall in exports by 2.15 percent during the same time period.Then, again exports of leather tanned shows increasing trend in two consecutive years of 2003-04 and 2004-05 by 7.21 percent and 20.63 percent respectively.However, it depicts decrease by 3.69 percent in 2005-06.In the Table 3.6 export of leather gloves from Pakistan shows increasing trend except the year of 2005-06.In 2005-06 export of leather gloves stood at US$ 151,459 thousand as compare to US$ 164,333 thousand in 2004-05 decreased by 7.8 percent during the same time period.Major buyers of Pakistan for the product of leather gloves are USA, Germany and France with their share at 22.99 percent, 11.64 percent and 7.85 percent respectively in 2005-06.Export of leather products in the category of apparel & clothing increased except 2002-03.The value of Export of Pakistan in this product stood at US$ 501,786 thousand in 2005-06 as compare to US$ 321,341 thousand in 2001-02, with an increase of 56.15 percent over the period.While Pakistan's export of leather manufactures n.s.shows growth of 558.21 percent during 2001-06.