Daniela Rodica SILIVESTRU


This paper explores the role of micro, small and medium size enterprises in the growth of per capita gross domestic product at European Union level between 2005 and 2010. Using a panel of data from 25 Member States the results show a positive connection between the prevalence of SME in terms of created value added and GDP per capita growth. When investigating the aforementioned relationship at enterprise size class level the results differ considerably. While microenterprises prevalence it terms of created value added does not appear to cause more growth in per capita income at EU level, small and medium sized enterprises are some of the main drivers of the annual per capita GDP growth.

Full text: PDF


: SMEs, economic growth, firm size, European Union

JEL Codes

L11, L25,


Ayyagari, M., Beck, T., Demirgüç-Kunt, A., 2003. Small and Medium Enterprises across the Globe. World Bank Working Paper Series, 2127, Available at:, [March 2012].

Audretsch, D. B., 1995. Innovation and Industry Evolution, Cambridge: MIT Press.

Audretsch, D.B., Carree, M.A., van Stel, A.J., Thurik, A.R., 2002. Impeded industrial restructuring: the growth penalty. Kyklos, 55, pp. 81-98.

Audretsch, D. B., Fritsch, M., 2002. Growth regimes over time and space. Regional Studies, No. 36, pp.113-124.

Audretsch, D. B., Keilbach, M. C., Lehmann, E. E., 2006. Entrepreneurship and Economic Growth. New York: Oxford University Press.

Audretsch, D. B., Keilbach, M., 2008. Resolving the knowledge paradox: Knowledge-spillover entrepreneurship and economic growth. Research Policy, 37, pp. 1697-1705.

Beck, T., Demirguc-Kunt, A., Levine, R., 2005. SMEs, Growth, and Poverty. NBER Working Paper Series, Vol. 11224

Beck T., Demirguc-Kunt, A. , Laeven, L., Levine, R., 2008. Finance, Firm Size, and Growth. Journal of Money, Credit and Banking, Vol. 40(7), pp.1380-1405.

Berkowitz, D., DeJong, D. N., 2005. Entrepreneurship and post-socialist growth. Oxford Bulletin of Economics and Statistics, 67, pp. 25-46.

D. Birch, 1979. The Job Creation Process, Final Report to Economic Development Administration, Cambridge: MIT Program on Neighbourhood and Regional Change.

Carree, M. A., Thurik, A. R., 1998. Small firms and economic growth in Europe. Atlantic Economic Journal, 26(2), pp. 137-146.

Carree, M.; van Stela, A; Thurik, R; Wennekers, S., 2007. The Relationship between Economic Development and Business Ownership Revisited, Bettany Centre for Entrepreneurial Performance and Economics, Working Papers Series, Available at:, [February 2012]

Davidsson, P., Delmar, F., Wiklund, J., 2006. Entrepreneurship and the Growth of Firms. Northampton: Edward Elgar Publishing

Caves, R.E., 1998. Industrial organization and new findings on the turnover and mobility of firms. Journal of Economic Literature, 36, pp. 1947-1982.

Driscoll, J. C., Kraay, A. C., 1998. Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data. Review of Economics and Statistics, 80, pp. 549-560.

EIM Business & Policy Research, 2010. European SMEs under Pressure: Annual Report on Small and Medium –Sized Enterprises, Directorate General for Enterprise and Industry, Available at:, [March 2012]

European Commission, 2005. Recommendation 2003/361/EC Concerning the Definition of Micro, Small and Medium-Sized Enterprises, Official Journal of the European Union, Available at: [February 2012]

Foelster, S., 2000. Do entrepreneurs create jobs?. Small Business Economics, 14, pp. 137-148.

Hall, C., 2002. Profile of SMEs and SME Issues in APEC 1990 -2000. APEC Small and Medium Enterprises Working Group, Available at: [ February 2012]

Hart, M., Hanvey, E., 1995. Job generation and new and small firms: Some evidence from the late 1980s. Small Business Economics, 7, pp. 97-109.

Glaeser, E., Kallal, H., Scheinkman, J., Shleifer, A., 1992. Growth in cities. Journal of Political Economy, 100, pp. 1126-1152.

Kalhoro, F. A., Bhutto, N. A., Maari, S. A, Bibi, S., Butt, F., 2011. Small and Medium Enterprises as Engine of Economic Growth: A Cross-Country Analysis. 3rd SAICON Conference, Available at:, [March 2012]

Leegwater, A., Shaw, A., 2008. The Role of Micro, Small, and Medium Enterprises In Economic Growth: A Cross-Country Regression Analysis, USAID Micro Report, No. 135, Available at:, [March 2012]

Mueller, P., 2006. Exploring the knowledge filter: How entrepreneurship and university-industry relationships drive economic growth. Research Policy, 35, pp. 1499-1508.

Newey, W. K., West, K. D., 1987. A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix. Econometric, 55, pp. 703-708.

Robbins, D. K., Pantuosco, L. J., Parker, D. F., Fuller, B. K., 2000. An empirical assessment of the contribution of small business employment to U.S. state economic performance. Small Business Economics, 15, pp. 293-302.

Tambunan, T., 2006. Micro, Small and Medium Enterprises and Economic Growth; Center for Industry and SME Studies, Working Paper Series, No. 14, Available at:, [March 2012]

Thurik, A. R., 1996. Small firms, entrepreneurship and economic growth. In: P. H. Admiral, ed. 1996. Small Business in the Modern Economy. Oxford: Basil Blackwell, pp. 126–152.

World Bank, 2012, World Bank Doing Business Reports. database available online at: [March 2012]