Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/218571 
Year of Publication: 
2015
Citation: 
[Journal:] South African Journal of Business Management [ISSN:] 2078-5976 [Volume:] 46 [Issue:] 2 [Publisher:] African Online Scientific Information Systems (AOSIS) [Place:] Cape Town [Year:] 2015 [Pages:] 15-27
Publisher: 
African Online Scientific Information Systems (AOSIS), Cape Town
Abstract: 
The growth of Micro, Small and Medium Enterprises (MSMEs) is often regarded as a solution to persistent unemployment in developing countries. Studies have shown that access to finance is the most serious obstacle to MSMEs' growth. This paper investigates key obstacles to the growth of MSMEs in South Africa using the World Bank Enterprise Surveys of 2003 and 2007. Two approaches are used to determine the key obstacles. The first improves on the simple count-of-ratings method used by many researchers. The second estimates the effects of obstacles on growth through sequential multivariate regressions based on the Growth Diagnostics framework by Hausmann, Rodrik Velasco (2005) and identifies two levels of obstacles' intensities: binding constraints with negative and significant effects and constraints with notable effects whose negative effects are significant but less than the binding. From both count- and regression-based analyses, access to finance is a relatively less important obstacle. The count-based analysis finds crime to be the top obstacle. In the regressions, ‘courts', which refers to the efficacy of the legal system and thus related to crime, is binding. Electricity and transportation of goods are the constraints with notable effects.
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Creative Commons License: 
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Document Type: 
Article

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