Question

What are the negative impacts of Small and medium-sized enterprises on third world country?

Answer 1

As it is already known that third world countries have to deal with number of challenges related to different dimensions of their economic growth and development. Although Small and medium sized enterprises are very crucial in that growth story as they provide huge amount of employment at grass root level but they have several negative impacts on the growth story of countaries. As already mentioned that they are the source of huge employment and help to solve the problem of unemployment but the employment provided by these small and medium sized enterprises is temporary in nature.

As large number of these enterprises could not sustain and die out very soon. This again leads to the unemployment. Most of them have been suffering form financial crunch and has high rate of bankruptcy. As we know the development of small and medium sized enterprises does not provide the country a comfortable position in the competitive market and they fails to sustain in that competitive environment. Sometime these industries are responsible for ruining the brand image and value of aspiring small and medium sized enterprises.

The always keep on operating at their existing scale and could not provide a base for larger industrial growth due to their limited capital . Sometime these enterprises becomes a huge burden for the economy as government has to provide protection to them. They also fails in developing a healthy working environment. Basically small and medium sized enterprises failed to provide a base for industrial growth which these countries needs. All these impacts the economy in a negative way and does not helps it to develop.