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Formal and Informal Sector Micro Enterprises and Their Linkages with the Rest of the Peshawar Urban Market

Yasmin, Ghazala (2006) Formal and Informal Sector Micro Enterprises and Their Linkages with the Rest of the Peshawar Urban Market. PhD thesis, University of Peshawar, Peshawar .



This study of 60 cases of micro enterprises, with data for three years (2001-3), found that, on average, a micro enterprise employed 4.54 laborers, with a 70:30 skilled and unskilled labor proportion. A total of 16.561 thousands were found invested in each micro enterprise with 39:61 capital and non-capital investments. Of the micro enterprises' annual average total purchases of Rs.386 thousands, 15% were made from micro enterprises, 26% from small, 30% from medium and 29% from large businesses. Of the annual average total sale of Rs. 1219 thousands, 48% were made to businesses and 52% to final consumers. Of the total sale of Rs.585 thousands to businesses, 19%, 23%, 27% and 31% were made to micro, small, medium and large enterprises, respectively. Micro enterprises, on average, gave rise to Rs.833 thousands per annum as value-addition. Value-addition ranged between Rs.213 thousands and Rs. 1908 thousands. It remained fairly stable (CV 0.4348) over the 2001-2003 period. Micro enterprise appeared to be the most contributory business medium; first, these provided employment to 4 – 5 persons per micro business and had been found the most labor-intensive businesses compared to small, medium and large enterprises. Second, micro enterprises contributed positively towards capital formation; on average, these increased their total investments by 66.60%, including a 100% increase in fixed capital and 50% increase in working capital. Third, contribution of micro enterprises towards value addition remained the highest (value-addition of Rs.02.19 for every rupee spent on raw-material purchases) compared to other businesses (Rs.01.52, Rs.01.80 and Rs.01.82 for small, medium and large enterprises, respectively). Fourth, micro enterprises contributed, on average, Rs.52 thousands to Rs.59 thousands to family welfare on monthly basis. Econometric analysis of value addition in micro enterprises suggested that capital investments yielded the greatest positive contribution, followed by training of the entrepreneurs and improvement of skills of the labor engaged. Second, sales to final-consumers accounted for the highest contribution, followed by sales-to-other businesses and sales-to-micro enterprises. Third, purchases (of raw materials), both from other businesses and micro enterprises, being the cost items, were negatively related with value-addition; however, since higher negativity came from purchases-from-other-businesses compared to the purchases-from-micro enterprises, the enhanced purchases from micro enterprises would help increase value-addition. The Leontief Input-Output model helped to estimate the 'extent of backward linkages', namely bLj > I for micro enterprises and bLj < I for small, medium and large businesses, suggesting that it were only micro enterprises, wherein a unit increase in final demand gave rise to a greater than average impact. The study recommended that establishment and development of micro enterprises be given priority, with special emphasis on more investments in capital goods, improvement of employees, skills and training of the entrepreneurs. It was further recommended that, without ignoring the importance of sales-to-businesses, sales-to-final-consumers be given special care as well as special emphasis be put on purchases-from-micro enterprises, without ignoring the importance of purchases-from-other businesses.

Item Type:Thesis (PhD)
Uncontrolled Keywords:Formal, Informal, Sector, Micro Enterprises, Linkages, Rest, Peshawar, Urban Market
Subjects:Social Sciences(g) > Economics (g5)
ID Code:6826
Deposited By:Mr. Javed Memon
Deposited On:29 Jul 2011 10:48
Last Modified:29 Jul 2011 10:48

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