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Rouhani banks on small businesses to generate big growth

Even though they constitute more than 85% of businesses in the country, Iran's small- to medium-sized enterprises generate a mere 14.7% of GDP and less than 30% of employment, leading the administration to focus on boosting this crucial sector.
An employee works at Takhfifan company in Tehran, Iran January 19, 2016. REUTERS/Raheb Homavandi/TIMA  ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. FOR EDITORIAL USE ONLY.   - RTX2330R

TEHRAN, Iran — To achieve its target of 5% economic growth this year, the administration of President Hassan Rouhani is seeking to revive small- and medium-sized enterprises (SMEs) by continuing to focus on attracting foreign direct investment into slumbering industrial estates. Yet, in spite of the injection of $1.8 billion worth of foreign direct investment into SMEs in the three years since Rouhani took office, the reality is that almost two-thirds of small- and medium-sized enterprises in Iran have reportedly been shuttered.

The importance of reviving SMEs should not be underestimated. In developed economies, they are among the major drivers of economic growth, greatly contributing to both gross domestic product and job creation. Indeed, in high-income countries, SMEs on average generate more than half of GDP and account for over 60% of employment.

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