Introduction

Over the past two decades trade and investment have been the driving forces in accelerating economic growth in South Asia. In the recent decade South Asian countries have increased export competitiveness and foreign direct investment inflows. As a result, new business opportunities have opened up for domestic enterprises. Despite their tremendous potential, SMEs1 in South Asia are still at a disadvantage due to a lack of essential business factors such as capital, profitability, managerial skills, trained labour, brands and networking. Although SMEs account for more than 90 per cent of all private enterprises and employ roughly 60 per cent of the domestic workforce in South Asia, relative share of SMEs production in total domestic output is much smaller, approximately 35 per cent, as is the direct contribution of SMEs to merchandise export earnings, which is around 25 per cent (AAMO 2007).

Related Subject(s): International Trade and Finance