Currently, instead of large enterprises, small and medium enterprises (SMEs) have gained prominence in developing nations; because of the higher labor-intensity and working with less capital and low management cost. SMEs are a major driver of employment growth and poverty alleviation in the least developed countries (LDCs). The refining process of economic growth in developing nations requires development in SMEs. As an objective, this paper attempts to assess the role of SMEs in the economic growth of Pakistan. The analyses are based on the annual time-series data and the sample period was 1990 to 2018. Real Gross Domestic Product growth has been used as a proxy for economic growth in Pakistan, and part of SMEs in economic growth has been measured through a total output of SMEs in GDP. Unit root tests are employed to verify whether the variables are stationary. The Ordinary least square (OLS) regression equation technique has been used to evaluate the study data. The main outcomes of the study exposed that SMEs have a significant effect on economic progress and work more efficiently for the economy. Moreover, study suggestions, limitations, and further research directions are presented.

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