Do GCI indicators predict SME creation? A Western Balkans cross-country comparative analysis

AuthorFëllënza Lushaku - Alban Elshani - Lekë Pula
PositionIndependent researcher - Faculty of Economics, University of Pristina - Faculty of Economics, University of Pristina
Pages48-54
ISSN 2410-3918
Acces online at www.iipccl.org IIPCCL Publishing, Tirana-Albania
Academic Journal of Business, Administration, Law and Social Sciences Vol. 2 No. 1
March 2016
48
Do GCI indicators predict SME creation? A Western Balkans cross-country
comparative analysis
Fëllënza Lushaku
Independent researcher
Alban Elshani
Faculty of Economics, University of Pristina
Lekë Pula
Faculty of Economics, University of Pristina
Abstract
In early stages SMEs were seen as insignificant supplement to large business supply, whereas
today they have a very important social and economic role, because of their contribution to
job creation. These contributions are very valuable in times of crises and rising unemployment.
In Kosovo and the Western Balkan countries, including countries such as Albania, Macedonia,
Montenegro, Serbia and Bosnia and Herzegovina, the development of SMEs can contribute in
facing many challenges, effects of inequality, high level of unemployment and demographic
challenges. In addition, SME development can contribute to strengthening the competitiveness
and productivity, while also promoting the growth of income per capita.
Besides the positive perception the creation of small and medium enterprises has, it is also
indispensable to consider their extinction rate, being the most affected category of businesses,
especially in the initial stages. It is proved that the net SME creation and cross-country
differences in the relationship between new businesses and extinct businesses, can serve as a
recommendation for policy makers in order to create a favorable climate for small and medium
enterprises. GCI indicators that measures global competitiveness are used to determine if the
climate of competitiveness predicts the development of SMEs.
Keywords: SMEs, GCI, Western Balkans.
Introduction
SMEs are often considered as locomotives of economic growth (Gray & Stanworth,
1991). OECD estimates that small and medium enterprises account for 90% of firms
and employ 63% of the workforce in the world (Munro: 2013) SMEs today are very
different from large enterprises (Tucker & Berranger, 2002). SMEs participate in every
sector of the economy and ensure a high level of employment in all sectors (Binks &
Coyne, 1983). SMEs have a crucial importance in the economic development of any
free society (Curran, 1986). SMEs are the main source of creation of new jobs and
income generation and have shown rapid revitalization as of late. Employment in
private enterprises is increasing and also structural changes within enterprises occur,
which are expressed through a decline in the number of commercial enterprises and
increase of manufacturing enterprises. The economic development of the Western

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