MSME Promotion, Inequality and Decentralized Wealth Creation: A Strategic Policy Perspective

Abstract

The study aims to ascertain the impact of micro, small and medium enterprises (MSMEs) growth on wealth creation and its distribution in India concerning macroeconomic variables such as GDP (Gross Domestic Product) per capita, unemployment, Foreign direct investment (FDI), human development index (HDI) and the urban population (URP). The research has examined the underlying short-term association using ECM, FMOLS, DOLS and CCR to estimate the long-run association between the identified variables. It documents a positive relationship between the share of the B[Formula: see text] populace and the FDI. On the other hand, per capita GDP, in the long run, had a negative association with MSME share, URP and HDI. Similarly, for the top 10 percentile (T[Formula: see text]) share, there was a positive relationship between MSME share and URP. Therefore, the results document a decentralized wealth creation for an MSME-focused development strategy in the short run to address skewed wealth creation in emerging societies.