Reports

Small-Sized Enterprises (SSE)The Best Choice for Libyan Economy

December 29, 2016

Dr. Abdallah M'hamad Shamia

Introduction

 Small-Sized Enterprises (SSE) play an important role in achieving the objectives of economic and social developments in most countries of the world. These enterprises represent a large percentage of businesses in the industrial, agricultural and services sectors as well as several other sectors. These businesses contribute to absorbing a large number of the working force and in attenuating the crisis of unemployment. They also play an important role in acquiring technical skills and meeting people's needs of goods and services.

       Small-Sized Enterprises are the most numerous kinds of business projects and the most dependent on local raw materials and capacities, as well as on locally available technology. Given its important role, the Small-Sized Enterprises (SSE) have received significant attention in most industrialized countries, and some developing countries. We will try to shed the light on the relative importance of these enterprises in an attempt to draw attention to them when developing the fundamentals of our national economy in the upcoming phase.

 

1- Definition and Characteristics

 Small Sized Enterprises are among the most appropriate methods for investment and development as it can, if support, care, and attention are provided, to play an effective role in:

- Maximizing production;

- Accumulating savings;

- Developing exports;

- Creating new job opportunities;

- Developing administrative skills and technical abilities, in general.

The concept of Small Sized Enterprises raises much controversy among economists as there is no consensus on a single definition that could apply to all businesses in all areas and under all circumstances. Moreover, judging a business as small, medium or large is based on certain criteria and standards as the conditions and the surrounding environment in which the business is operating has to be taken into consideration as well as the stage of development of the society and its customs and traditions.

Despite that, most of those concerned with studying Small and Medium-Sized Enterprises (SME) assent on using a large number of criteria to identify the concept, pursuing two methodologies, which are:

A quantitative approach 

Descriptive Approach

 The first approach focuses on quantitative criteria such as:          

           Number of Workers and Employees

           Size of Invested Capital

           Market Share

           Quantity, Value, and Quality of Product

The second approach focuses on descriptive criteria to distinguish between small and large enterprises, such as:

           Management Style and Organization

           Size of Autonomy

           The Level of Services Provided by the State

In reality, the number of employees is the most commonly used criterion to distinguish small enterprises, followed by the size of invested capital criterion. Both criteria vary from one country to another; for instance, the United States of America considers an enterprise that employs less than 50 workers and employees as a small enterprise. While in Japan and India a small enterprise employs less than 300 workers and employees. Both criteria could be used, such is the case in some countries, for example, the United Kingdom and Pakistan, and some Arab countries such as Saudi Arabia, Kuwait, and Egypt, and that is because using one of the criteria could lead to inaccuracies in classifying the businesses for the following reasons:

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