A Brief Note On Small And Medium Scale Enterprises In Sri Lanka

Abstract

Small and Medium Scale Enterprises (SMEs) are playing a very significant role in almost all the economies around the world irrespective of the countrie's development stage. However, it is obvious that SMEs function as a lifeline in informal sector in Asia, Africa, Latin America, and eastern Europe due to their contribution to many aspects of the overall economy of the companies such as employment generation, exports, tax income, innovation, competitiveness, equitable income distribution, social stability, domestic resources usage, and regional development. Ultimately, they are the main source of economic growth and leading sector. The South Asian region is no exception for this SME phenomenon. Most of these SMEs around the world are struggling to survive in today's globalized competitive environment. They are hampered by the lack of technology, access to credit and markets, and dumping of foreign products, etc. In spite of the various policy reforms, incentives, and assistance offered by successive governments in Sri Lanka with the assistance of the private sector, NGOs, and donor agencies during the post-liberalization period after 1977, this SME sector is less dynamic and underdeveloped as against large-scale enterprises in the national economy. The growth and expansion of SMEs are constrained by problems relating to both product and factor markets. Lack of institutional support and policy inertia have further reduced the full potentials of SMEs to the national economy. Therefore, this case study presents some first-hand access information on Sri Lankan SMEs' basic profiles and an important research agenda to motivate researchers and practitioners of SMEs around the world.