Dr. Zaid Bakht 

Dr. Abul Basher 

Summary of the study 

SMEs have been the more dynamic component of the manufacturing sector during 2005/06–2010/11 and  accounted for about 4.5% of total employment (i.e., 35.5% of total manufacturing employment) and 12.4% of GDP (i.e., 69.9% of total manufacturing value-addition) in FY11. However, the demonstrated dynamism conceals two important factors.  First, the heterogeneity of the sector; available research shows that there are significant inter-industry variations in productivity growth within the sector. While some are growing by taking advantage of the liberalized trade regime, some are struggling to thrive in the growing competition. Secondly, despite the demonstrated dynamism during 2005/06–2010/11 the SME sector is facing a number of constraints which needs to be taken care of. Some of these constraints are generic in the sense that they are common to the manufacturing sector and some are specific to the SMEs.