The Impact of Small and Medium-Size Enterprises (SME) on Economic Growth in Iran during 2004-2006

In the last decades, the industrial structure of countries changed and the SME has become important in development strategy. Because of new industrial countries successful experiment, economic experts and policymakers believe that the cause of economic development of developing and developed countries is private sector and especially the SME. Surveys indicate that SME has an impact on economic growth via entrepreneurship, innovation and new job opportunity creation. Therefore, in Iran the more concern and attention is paid for the improvement of job creation via SME. Also, in Iran, the number of SME is high and more than half of employees work in the SME. Therefore, SME will play an important role in industrial and economic growth programs in the future. This paper studies the relationship between the number of SME and province economic growth by Panel data method by using the augmented Solow growth model. Findings based on provincial data during the (1383-1385) showed that there is the positive and meaningful relationship between SME and country economic growth. This relationship is a reason for the importance of this industry.