This thesis presents an examination of the importance of Small and Medium
Enterprises (SMEs) for economic growth and examines how sensitive employment in
SMEs is to business cycle fluctuations in Brazil.
The thesis uses different empirical techniques to investigate the role of SMEs
in the Brazilian regional economic growth, using a panel dataset from 1980 to 2004
for 508 Brazilian micro-regions. It first uses standard panel data estimators (OLS,
LSDV, system and first differenced GMM) to analyse the (augmented) Solow
growth model encompassing the importance of the relative size of the SME sector
measured by the share of the SME employment in total formal employment and the
level of human capital in SMEs measured by the average years of schooling of SME
employees. The results show that the size of the SME sector is not significantly
important for regional economic growth, but that human capital embodied in SMEs
is more important in this process. [Continues.]
A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.