Bridging Economic Growth and Social Inclusion: The Role of SME Definitions in Global Development

Abstract

Small and Medium-Sized Enterprises (SMEs) play a pivotal role in global social welfare by fostering employment, reducing poverty, and promoting inclusive economic development. However, the definitions, classifications, and support mechanisms for SMEs vary across global institutions and national policies, affecting their access to financial resources, regulatory support, and social protection. This paper critically examines SME definitions from the European Union (EU), World Bank, Asia-Pacific Economic Cooperation (APEC), and South Africa to assess their implications for social welfare, economic justice, and poverty alleviation. Through a comparative analysis, we highlight the disparities in SME classifications and explore how these definitions shape policy interventions in developing economies. The study further investigates how SMEs contribute to job creation, gender equity, and financial inclusion, particularly for marginalized communities. Recommendations are provided to ensure that SME frameworks align with social development goals, including economic inclusion, social protection, and sustainable livelihoods. Findings highlights the importance of tailoring SME support structures to enhance their role in strengthening care service delivery, addressing economic vulnerabilities, and fostering long-term resilience in low-income regions.