The Role of small and medium-sized enterprises in the national economy

ENThis paper analysis is related to the growing importance of the small and medium-sized enterprises and its influence to the overall development of the country’s economy. An intensive monitoring of the development of the small and medium-sized businesses started in 1970s. The importance of smaller firms, especially since the late 1980s, has been increasingly recognized as a key to the revived competitiveness of the United States. In other countries such recognition has been accorded for decades. The experience of the European Union member states and other developed countries reveals that the small and medium-sizes business development promotes competitiveness and, consequently, the growth of the economy. This sector of the economy is the first to notice all the changes of the supply-demand in the market, is quick to adjust itself to them, to create new workplaces in the areas where certain products and services are in greatest demand in the specific period of time. Lithuanian economy is one of the most impressive ones in Europe. Comparing with Baltic States, the GDP created in Lithuania is almost twice than in Estonia at the same period. The GDP in Lithuania has been steadily rising during the past five years; in 2006 there was a sharp increase in GDP in Latvia. Hereby the increase of GDP in Estonia is quite stable. The concept of Lithuanian’s SMSs is established in the Law that small and medium-sized businesses entities; it comprise medium-sized enterprises, small enterprises (including micro-enterprises) and natural persons who shall, in the manner prescribed by law, enjoy the right to engage in independent commercial, production, professional or similar activities, including the activities which require a business certificate.The share of value of the goods and services created by SMEs is increasingly growing each year in Lithuania and in 2006 it could reach three quarters of country’s GDP. The gross value added created by SMEs has also been steadily increasing during the past years (it increased two times). The major share of the gross value added came from larger companies that employed more than 250 employees. Looking at the types of economic activities was clarified, that there is a difference between country’s and SMEs gross value added clusters. Here could be stated the second difference - in distribution of gross value added created by SMEs by legal forms of enterprises in 2005 in Lithuania. According to the statistical data, the comparative share of SMEs in foreign trade counting exports and imports in the country’s foreign trade significantly increased in 2003-2004 and continued rising during 2005; it already contains over two thirds country’s foreign trade. The exports of SMEs had reached half national exports. Summarizing the research results it was defined that small and medium-sized enterprises play a significant role in Lithuanian’s national economy and this factor greatly stimulates the whole economic growth of the country. It is possible to forecast, that the role of SMEs will become even more important in the future and that the growth of the Lithuanian economy will remain close to its potential. It is should be stated that the growth of the GDP in the nearest future will be greatly influenced by the support from the EU and other mechanisms and the ability to properly assimilate it. Key words: economic growth, small and medium-sized enterprises, gross domestic product, gross value added. [From the publication]