Micro, Small, and

Medium Enterprises

Micro, Small, and Medium Enterprises

2010

Around the World: How Many Are There,

and What Affects the Count?
Khrystyna Kushnir, Melina Laura Mirmulstein, and Rita Ramalho

T
his note provides an overview of new data on MSME (micro, small, and medium enterprise)
MSME Country Indicators

Country Indicators for 132 economies. There are 125 million formal MSMEs in this set of
economies, including 89 million in emerging markets. Descriptive statistical analysis is
presented on the relationship between formal MSME density (number of formally registered MSMEs
per 1,000 people) and key obstacles for MSMEs, such as access to finance and informality. This
analysis shows that formal MSMEs are more common in high-income economies, but that in low-
and middle-income economies, MSME density is rising at a faster pace. Second, although there is
significant variance in the countries’ definitions of MSMEs, around a third of the countries covered
define MSMEs as having up to 250 employees. Third, formal MSMEs employ more than one-third
of the world’s labor force, but the percentage drops significantly with income level. Fourth, MSMEs
are more likely to identify access to finance as their biggest obstacle than are large firms. In fact, in
economies with a higher percentage of firms with no formal credit, MSME density is lower. Finally,
a larger informal sector is associated with lower formal MSME density. Measures of barriers to firm
entry and exit, such as the minimum capital requirement and the recovery rate in case of bankruptcy,
are also associated with lower formal MSME density.

MSME Country Indicators • The income group of the economy based on GNI per
capita, based on the World Bank Atlas method (from
MSME Country Indicators record the number of
the World Development Indicators);
formally registered MSMEs across 132 economies. This
• Time series data going back 20 years for some
database is current as of August 2010 and expands on the
economies, for the following variables: the number
January 2007 “Micro, Small, and Medium Enterprises: A
of formally registered MSMEs, MSME density,
Collection of Published Data” edition. The new data can
breakdown by size of MSMEs, and MSME share in
World Bank / IFC

be found at http://www.ifc.org/msmecountryindicators
total employment; and
More specifically, the MSME Country Indicators
• Estimates of the number of MSMEs in the informal
database contains information on the following:
sector for 16 economies.
• The total number of formal MSMEs in the economy
and the number of MSMEs per 1,000 people
The dataset presents data originally collected by each
(MSME density);
of the economies included in the sample. All the country
• A breakdown into micro, small, and medium
sources are listed in the database, the most common
enterprises based on the number of employees, where
being national statistical institutes or special government
such data is available, or based on other variables such
agencies that monitor and administer programs for
as annual sales;1
MSMEs. As the data was originally collected by different
• The formal MSME share in total employment;
countries, there are limitations regarding the extent to
which the data can be standardized. Where possible,
MSMEs are defined as follows: micro enterprises: 1–9
employees; small: 10–49 employees; and medium: 50–249
employees. However, in the majority of countries, this
definition did not match the local definition, in which
cases the local definition took precedence. Only firms
with at least one employee are included.
Of the 132 economies covered, 46 economies define
MSMEs as those enterprises having up to 250 employees.
For 29 economies, variables other than total employment
are used or an MSME definition is not available (Figure
1). Among such other variables are the number of
employees differentiated by industry, annual turnover, and
investment. Not surprisingly, the overwhelming majority
of formal MSMEs globally are micro enterprises, with 83
percent of all MSMEs in this category.2
The data covers only the formal registered sector
(except for 16 economies where data is available). This
is an important limitation given that informal MSMEs,
especially in developing countries, often outnumber
formal MSMEs many times over. For example, in India
in 2007, there were fewer than 1.6 million registered
MSMEs and 26 million unregistered MSMEs, that is,
about 17 unregistered MSMEs for every registered one.
Important lessons were drawn from the MSME data
while building the MSME Country Indicators, in particular
the following:
Figure 1 Distribution of the MSME
Definition by Number of
Employees
A third of the economies (out of 132 covered)
define MSMEs as having up to 250 employees.
<499
<299
<250
Number of Employees
• MSME data are not always standardized across
countries and time. Data on MSMEs are gathered
by various institutions using different methods.
These institutions define MSMEs based on
differing variables and scales and sometimes
change their definitions. EUROSTAT’s Structural
Business Statistics provides the best example
of regional coordination and harmonization of
MSME data.
In order to have comparable MSME data, the following
steps could be taken:
• Economies should be surveyed using a unified
and standardized method;
• Institutions in charge of gathering MSME data
should coordinate with each other regarding the
variables and methods used to determine the
size of the MSME sector.
• These actions can be taken first at the regional level
and secondly expanded to the global level. In return,
economies would reap the benefits of a cross-country
and time-series analysis of MSMEs’ contribution to
development.
• MSME data on the informal sector are scarce and
are not comparable across countries. This is due to
differences in the definition of the informal sector
and in estimation methods. Estimates of the informal
sector are needed in order to make a comprehensive
evaluation of the MSMEs’ contribution to economic
development. This data gap could be filled by
surveying MSMEs operating in the informal sector or
by encouraging institutions that collect MSME data
on the formal sector to also develop estimates of the
size of the informal sector.
• Time series data is not always available. However,
it is crucial for future evaluation of the reforms of
business regulations.
• Some institutions collect data on MSMEs only
in selected sectors, most often in manufacturing.

<200
■ East Asia and the Pacific [10] This limits the possibilities of evaluating MSMEs’
<149 ■ Europe and Central Asia [14]

<100
■ High-income: OECD members [28] contribution to gross domestic product (GDP) or
<79
■
■
Latin America and the Caribbean [15]
Middle East and North Africa [9]
employment.
<60 ■ High-income: Non-OECD economies [14] For more details on the methodology, please refer to
South Asia [3]
“Methodology note on the MSME Country Indicators.”4
■
<50 ■ Sub-Saharan Africa [10]
<19

Where are MSMEs Most Common?

0 10 20 30 40 50

Number of Economies In the 132 economies covered, there are 125 million
formal MSMEs of which 89 million operate in emerging
markets. These results are in line with a recent study
Source: MSME Country Indicators. published by IFC and McKinsey & Company in 2010,
Note: Name of the region [#] signifies the number of “Two Trillion and Counting,” which found that there are
economies from the region included in the analysis. The figure between 80 and 100 million formal MSMEs in emerging
uses data from 103 economies.3
markets.

2
 Figure 2 MSME Density Across the World

Europe and Central Asia [18]

6,667,715 MSMEs

High-income:
OECD members [29] Middle East
36,878,280 MSMEs and North Africa [7]
4,488,767 MSMEs East Asia and the Pacific [11]
South Asia [3] 39,293,783 MSMEs
7,451,803 MSMEs

Latin America
and the Caribbean [16] High-income:
13,763,465 MSMEs Non-OECD
Sub-Saharan
Africa [13] economies [19]
13,154,122 MSMEs 1,848,282 MSMEs

MSMEs per 1,000 people

1-10 11-20 21-30 31-40 41-50 51 and above No data avilable

Sources: MSME Country Indicators.

Note: Name of region [#] signifies the number of economies from the region included in the analysis. The figure uses the most
recent data available after the year 2000. The figure use data for 116 economies.5

On average, there are 31 MSMEs per 1,000 people Darussalam (122), Indonesia (100), Paraguay (95), the
across the 132 economies covered. The five countries with Czech Republic (85), and Ecuador (84). Overall, economies
the highest formal MSME density are as follows: Brunei with higher income per capita tend to have more formal
MSMEs per 1,000 people (Figure 3). This result is in line
with data previously presented in the literature. Klapper
Figure 3 MSME Density and Income et al. (2008) find that business density (which includes
per Capita both MSMEs and large firms) is positively correlated with

Economies with higher income per capita

tend to have more MSMEs per 1,000 people. Figure 4 Median MSME Density by Region
IDN
100 PRY

ECU
CZE
PRT
The regional distribution of MSME density
80 JAM
MUS GRC
ISL
is in line with income level distribution.
MWI

ITA
NGA KORESP
MSME Density

60 HUN NOR
45
CYP LUX
BOL SVN 40
Median MSME Density

JFN
KEN
HND ARMBH CHL LTU ERA CHE 35
MF HKG
AUS
POL
40 VNM THA BGR
MNE
URYTUR EST NZL AUT 30
EGY COL MLD
SLV BWA SAU ISR
WBG
MAR JOR GBR 25
TJK BER
MKD BRA
AZE ROM DEUIRL 20
BGD YEMPAK
DZA KYZ HRV
20 ARE
UZB MDA CRI
ARG
PTO
STK KWT 15
SRB RUS
PH UKR
RWA
LAO TMPCMR BLR 10
KCZ DOMLBN VEN OMN
MOZ IND
0
SDN 5
0 6 8 10 12
0
Sub-Saharan East Asia South Asia Europe & Middle East High-Income: Latin America High-Income:
GNI per Capita, Atlas Method (log) Africa & the Pacific [3] Central Asia & North Africa Non-OECD & the Caribbean OECD
[14] [11] [18] [7] economies [16] members
[19] [29]

Sources: MSME Country Indicators, World Development

Indicators. Source: MSME Country Indicators.
Note: The results of the regression are statistically significant Note: Name of the region [#] signifies the number of
at the 5 percent level. The figure uses the most recent data economies from the region included in the analysis. The figure
available after the year 2000. The figure uses data from 109 uses the most recent data available from 117 economies7 after
economies.6 the year 2000.

3
income per capita. It is important to note that the analysis high-income economies start from a higher base, which is
presented in this note refers only to correlations and that why the growth rate appears slower. In fact, even when
no causal inferences should therefore be made. taking into account differences in income level, economies
The regional distribution of MSME density is in line with with lower bases grow at higher rates.8 Only low-income
the income level distribution. Consequently, Sub-Saharan economies do not follow the pattern of “higher income
Africa and high-income OECD economies are at opposite – slower growth rate” when compared to middle-income
ends of the spectrum with regard to MSME density economies, which could be because the informal sector
(Figure 4). Somewhat surprisingly, Latin America and absorbs more MSMEs in low-income economies than in
the Caribbean have more MSMEs per 1,000 people than upper- and lower-middle-income countries.
non-OECD high-income economies. However, once the In the high-income economies, MSMEs are not only
countries that are heavily dependent on mineral resources denser in the business structure, but also employ a higher
(United Arab Emirates, Qatar, Oman, Kuwait, and Saudi percentage of the workforce. In half of the high-income
Arabia) are excluded from the sample, the MSME density economies covered, formal MSMEs employed at least 45
for non-OECD high-income economies is at a similar percent of the workforce, compared to only 27 percent in
level to that for Latin America and the Caribbean. low-income economies (Figure 7).
Globally, the number of MSMEs per 1,000 people These indicators highlight the importance of MSMEs to
grew by 6 percent per year from 2000 to 2009 (Figure 5). economic development and job creation. Formal MSMEs
Europe and Central Asia experienced the biggest boom, employ more than one-third of the global population,
with 15 percent growth. Such a fast pace may have resulted contributing around 33 percent of employment in
from the continuation of post-Soviet privatization in these developing economies.
economies. Another possible contributing factor may be From a regional perspective (Figure 8), East Asia and
the accession of the Eastern European economies to the the Pacific have the highest ratio of MSME employment
European Union (EU). to total employment. This is mainly driven by China,
When considering the MSME growth rate from the where formal MSMEs account for 80 percent of total
standpoint of income per capita (Figure 6), high- income employment. The low ratio of formal MSME employment
economies grew three times slower than low-income to total employment in South Asia could be explained by
economies and five times slower than lower-middle- the fact that in the three countries covered, Bangladesh,
income economies. This could be explained by the fact that India, and Pakistan, the informal sector is large.

Figure 5 MSME Growth by Region, Figure 6 MSME Growth Rate by Income

2000-2009 Group, 2000-2009
Globally, MSMEs grew at a rate of 6 percent The MSME growth rate is three times
per year from 2000 to 2009. lower in high-income economies, than in
low-income economies.
18
12
Annual MSME Growth Rate

16
Annual MSME Growth Rate

14 10
12
10
8
8 6
6
4 4
2
2
0
High-Income: Latin America Sub-Saharan High-Income: East Asia Middle East Europe &
Central Asia
0
Non-OECD & the Caribbean Africa OECD members & the Pacific & North Africa
High Upper-middle Lower-midlle Low
economies [5] [2] [24] [4] [2] [14]
[26] [13] [15] [6]
[9]
Global [60] Income Group

Source: MSME Country Indicators. Source: MSME Country Indicators.

Note: Name of the region [#] signifies the number of Note: Name of the income group [#] signifies the number of
economies from the region included in the analysis. The figure economies from the income group included in the analysis. The
uses data for 60 economies. Data on economies that met the figure uses data from 60 economies. Data on economies which
next criteria were included in the analysis: (i) if the MSME met the next criteria were included in the analysis: (i) if the
definition remained unchanged from 2000 to 2009; (ii) if there MSME definition remained unchanged from 2000 to 2009; (ii) if
were data available for both time periods of 2000–2004 and there were available data in both time intervals of 2000-2004 and
2005–2009. 2005-2009.

4
 Figure 7 Key Obstacles for Firms and their Connection
Median MSME Employment
to MSME Density
(percentage of the total) by
Income Group The World Bank Enterprise Surveys dataset was used
to identify the biggest obstacles for firms worldwide.
Formal MSMEs employ more than one third
This dataset covers 98 countries, using the same sampling
of the world’s labor force, but the percentage
drops significantly with income level. and surveying methodology. It produces representative
estimates for the non-agriculture private sector economy
and allows for comparisons of firms of different sizes
50
within a country and globally. The Enterprise Survey data
Median MSME Employment

40
covers several aspects of the business environment and
30 includes both objective and perception-based questions.
20
Among other things, Enterprise Surveys measure the
biggest obstacles for firms of all sizes from a list of 15
10
potential obstacles.
0
High Upper-middle Lower-midlle Low
In the Enterprise Surveys dataset, firms are divided
[39] [26}
Income Group
[18] [20]
into the following categories: small (5 to 9 employees),
medium (10 to 99 employees), and large (100 or
more employees). Although this categorization may
Source: MSME Country Indicators, World Development not match the country-level definitions used in the
Indicators database. MSME Country Indicators database, the information
Note: Name of the income group [#] signifies the number of
economies from the income group included in the analysis.
presented in Enterprise Surveys can still be indicative
The figure uses the most recent data available after the year of the key obstacles facing small and medium-sized
2000. The figure uses data from 103 economies.9 The results of firms.
the regression are statistically significant at the 5 percent level.

Figure 8 MSME Employment vs. Figure 9 Six Most Commonly Cited

Total Employment Obstacles by Firms (out of 15)
Electricity and access to finance are the
In China, MSMEs provide 80 percent of the two most cited obstacles for businesses in
total employment, driving East Asia and the developing countries, and access to finance
Pacific to be the leader in the ratio of MSME affects small businesses much more than it
employment to total employment. does medium and large businesses.
18
% of Firms Identifying Obstacle X

1,200
Number of People Employed (in millions)

16
as the Biggest Obstacle

1,000 14
12
800
10

600
8
6
400 4
2
200 0
Overall
SMall
Medium
Large

Overall
SMall
Medium
Large

Overall
SMall
Medium
Large

Overall
SMall
Medium
Large

Overall
SMall
Medium
Large

Overall
SMall
Medium
Large

0
South Asia Middle East Europe & Latin America High-Income: Sub-Saharan High-Income: East Asia
[3] & North Africa Central Asia & the Caribbean Non-OECD Africa OECD & the Pacific
[6] [16] [13] economies [8] members [10]
[18] [28]
Electricity Access to Practices of Tax Rates Political Corruption
MSME Employment Total Employment Finance the Informal Instability
Sector

Source: MSME Country Indicators. Source: Enterprise Surveys Dataset.

Note: Regions are grouped in ascending order based on the ratio Note: The data cover 98 countries. The 15 obstacles are access
of the MSME employment to total employment. Name of the to finance; access to land; business licensing and permits;
region [#] signifies the number of economies from the region corruption; courts; crime, theft and disorder; customs
included in the analysis. For the following economies the number and trade regulations; electricity; inadequately educated
of employed by the MSMEs was calculated from the reported workforce; labor regulations; political instability; practices of
percentage of the total employment: Armenia, China, Ecuador, competitors in the informal sector; tax administration; tax rates
Ghana, Iceland, Israel, Jamaica, Nigeria, Myanmar, Malawi, and transport.
Malaysia, Pakistan, Singapore, Peru, Uzbekistan and South Africa.
The figure uses the most recent data available after the year 2000,
from 102 economies.10
5
 Figure 10 MSME Density and Enterprises Figure 11 MSME Density and SME Lending/
Unserved by the Credit Institutions GDP
The smaller the percentage of financially MSME density increases with SME lending.
unserved firms, the higher the formal MSME
density on average.

100 IDN 100 IDN

PRY PRY

ECU PRT CZE

ECU PRT
80 ISL
80
MUS JAM GRC
MWI MUS
ITA
MSME Density

ITA

MSME Density
60 ESP
60 NGA ESP KOR
HUN
NOR HUN
LUX
SVN CYP
BOL LUX SVN
BOL
CHI JPN
ARM KEN CHL
40 FIN BELFRASWEBOK LTU HND ARM
IDN IDN FRA
IDN
URY
ZAF 40 HKG OHL
POLMNE
FIN AUS
ZAF SWE BEL DNK
TUR VNM MEX URY EST
NLDBGR MEX TUR
IDN AUTOGP THA NZL
COL BWA LVA BGR CAN NLD
SLV BWA COLSLVEGY IDNUSR LVA
GBR
PER MAR GBR
RUN
DEO NFL TJK PER JOR
AZE
20 BRA
HRV YEM TJK
20 YEM AZEIDN
IDN
MK
ROM IDN DEU MYS
BGD
DZAIDN HRV
KAZ
SRB ARG MDA UZB TTO
PHL ARG SRH AWT
UKR CHN IDNIDN
IDN
RWA UGA PHL TUS UKR CHN
CMR UGA
BFA KGZ GHA MOZ LAGIDN
IDN
IDN IDN
0 IDN
IDN IDN
IDN
IDN AND
0 SDN TUN
0 2 4 6 8
0 .2 .4 .6
Micro, Small and Medium Enterprises Unserved by the
SME Lending/GDP
Credit Institutions (weighted average (percentage of firms))

Source: MSME Country Indicators, IFC and McKinsey & Source: MSME Country Indicators, Financial Access 2010
Company 2010. (Consultative Group to Assist the Poor (CGAP)).
Note: The results are statistically significant at the 5 percent Note: The figure uses data from 101 economies. The results
level, while controlling for GNI per capita (log) and if an of the regression are statistically significant at the 5 percent
outlier–Indonesia–is dropped. The figure uses data from level. When controlling for GNI per capita, Atlas method
52 economies. Included economies: (i) covered in both (log), the results are not statistically significant at the 5
databases; (ii) data were not extrapolated; (iii) with available percent level. Data for some countries were estimated by the
GNI per capita, Atlas method. CGAP. Included economies: (i) covered in both databases;
(ii) with available GNI per capita, Atlas method.

When presented with a list of 15 possible obstacles, overdraft, but do not have one—is smaller (Figure 10).
electricity and access to finance are the two most-cited by This finding matches the firm-level data that identifies
businesses in developing countries (Figure 9). access to finance as one of the most commonly
Firms of different sizes rank obstacles differently. cited obstacles, in particular by small and medium
Access to electricity is a significant constraint overall enterprises (SMEs).
and affects small, medium, and large enterprises alike. MSME density is not only correlated with whether
However, more small businesses list access to finance or not credit is used, but how much. MSME density is
as their biggest obstacle than do medium enterprises, lower in economies where MSMEs have some access
and fewer large firms see it as their biggest obstacle. to credit, but where it is not sufficient (underserved).
On the other hand, political instability is more often Furthermore, where SME lending (as a share of GDP)
identified as the biggest obstacle by large firms than by increases, MSME density also increases (Figure 11).
small ones.
It should be borne in mind that this information is Practices of Informal Sector and Corruption
based on the perceptions of firms and that it is therefore Competition from the informal sector and corruption
important to check if it is corroborated by objective among government officials also pose significant
measures: Are MSMEs in fact more common where they challenges for firms. Objective measures of the size
have easier access to credit? Are they more common where of the informal sector, barriers to entry into and exit
the informal sector is smaller? from the formal market, and the existence of informal
payments shed light on the importance of these obstacles
Access to Finance to the existence of MSMEs. First, the larger the informal
Formal MSME density is on average higher in sector in an economy, the lower the formal MSME
countries where the percentage of financially unserved density (Figure 12). This is likely due to the fact that
firms—that is, those that would like to have a loan or most MSMEs are more likely to operate in the informal/

6
 Figure 12 MSME Density and Shadow Figure 14 MSME Density and “Closing a
Economy Business” Recovery Rate
Where the shadow economy is larger,
Where the recovery rate of investment
there are fewer MSMEs participating in
in case of bankruptcy is lower, there are
the formal economy.
fewer formal MSMEs.

100 IDN 150

PRY

CZE
PRT MLT ECU BRN
80 ISL
JAM
MUSGRC MWI

ITA
100 IDN

MSME Density
PRY
MSME Density

KOR
60 ESP
EZU CZE PRT
BLZ ISL
NOR HUN
LUX GRC JAM
SVN BOL MWI MUS
JPN CHL KEN ITA
FRAFIN BEL LTU HND NGA ESP KOR
40 CHE AUG
SWL POL
ZAF HUN
MEXIDN EST NOR
IDNSGPVNM
NUL
NODCAN BGR 50 BOL
LUX SVN CYP
SAI USR EGY VAL
BWA CHL KENBIH ARM JPN
SLV HND FRA ETU
CHE EIM
GBR POL
IDN SWEAUSHKO BEL
DNK
JOR MAR IDN MNE
URY
EST THA MEX
PER IDN BCR AUT SZL NLD CANSGP
IRL
DEU MYS BGRROMBRA IDN LVA SAU ISR COL BWA
20 USA YEM HDP
IDNPAK KAZ WBG
IDN
JOR
SLV
MAR GBR
BEL
IDN IDN
ARE TTO BRA MKD
BGD IDN
YEM
IDN
MYS DEU USA IRL
PAKIDN
IDN
SVKKWT ARG
CRI MDA TTO ARE GTM
CHN PMLRUS UKR UZB SRA IDN KWT
GLRIDN SVK
RWA UGA PHL JKR RUS CHN UGA
LAOCMR RWA
OMN DOM BEA LMO
KHM VENNOMKOZ LBNIDN CMR BLR OMN
0 IND IDN
TUN CHA 0
SDN MOD TZAIDN

0 20 40 60 80 0 20 40 60 80 100

Size of the Shadow Economy (percentage of GDP), 2005 Closing a Business: Recovery Rate (Cents on the dollar)

Source: MSME Country Indicators, Buehn and Schneider Source: MSME Country Indicators, Doing Business Index 2010.
(2009). Note: The results of the regression are statistically significant at
Note: The figure uses data from 88 economies. The results of the 5 percent level, controlling for GNI per capita, Atlas method
the regression are statistically significant at the 5 percent level. (log). The figure uses data from 113 economies. 12
When controlling for GNI per capita, Atlas method (log), the
results are not statistically significant at the 5 percent level.
Included economies: (i) covered in both databases; (ii) with
available GNI per capita, Atlas method.

unregistered sector in countries where the informal

Figure 13 MSME Density and Minimum sector is large.
Capital Requirement for Second, in economies where it is more costly to start
“Starting a Business” or close a formal business, the density of formal MSMEs
Where it is required to have more is lower. Specifically, the minimum capital for “Starting a
minimum capital to start a business, Business” and the recovery rate for “Closing a Business”
there are fewer MSMEs.
are strongly correlated with MSME density (Figures 13 and
14). In other words, in economies where more minimum
IDN
100

ECU
CZE
PRT capital is required to start a business and where it is harder
ISL
80 GRC to recover investments in case of closure of the business,
ITA
formal MSME density is lower.
MSME Density

ESP
60 HUNNOR
LUX SVN
Finally, corruption is negatively associated with MSME
PRY HND
BIH
BELCHE
POR
LTU
SVE DNK
density, as evidenced by lower MSME density in countries
40 TUR EST
MEX
LVA
BGR AUT
NLD where firms are more frequently asked to make informal
MARJOR
TJK
HRV
payments (bribes) to government officials (Figure 15).
20 KAZ
GTM
DZA
UZB SVK
PRY
SRB KWT
PUL CHN UKR
KHM LBN CMR
GHA
0
0 50 100 150 200

Starting a Business: Minimum Capital (precentage of the income per capita)

Source: MSME Country Indicators, Doing Business Index 2010.

Note: The results of the regression are statistically significant at
the 10 percent level, controlling for GNI per capita, Atlas method
(log). The figure uses data from 47 economies. 11

7
 Figure 15 MSME Density and Percentage Notes
of Firms Expected to Make 1. For the legal definition of the MSMEs adopted by governments,
please see the note: “How Do Economies Define MSMEs?”
Informal Payments 2. This number was calculated using observations from 93
Where there is more corruption, economies where the breakdown between micro, small, and
there are fewer MSMEs participating medium enterprises was available.
in the formal economy. 3. Excluded economies: Algeria; Argentina; Armenia; Azerbaijan;
Belarus; Belize; Bolivia; Burkina Faso; China; Ecuador; Ethiopia;
100 IDN
Guyana; Hong Kong SAR, China; India; Indonesia; Korea,
PRY
Rep.; Kuwait; Kyrgyz Republic; Malaysia; Mauritius; Nicaragua;
CZE
PRT ECU
Panama; Qatar; Singapore; Sri Lanka; Sudan; Thailand; United
80
JAM GRC
Arab Emirates and South Africa on the grounds that they
apply an MSME definition that uses variables other than total
MUSMWI

employment or that their MSME definition is not available.

MSME Density

60 ESP
HUN 4. Kushnir, Khrystyna. 2010. “Methodology Note on the MSME
SVN
CHL ARM
BIH
BOL
KEN
Country Indicators.” IFC and the World Bank. http://www.ifc.
40
EST
LTU HND
MNE POL
URY
ZAF
TUR MEX
org/msmecountryindicators
VNM
OOL
LVAGUY
WBC
BGR
BWI SLV 5. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
20
IRL
MAI
PER
BRA
HRV
JOR
ROM TJK
PAK
AZE
BGD
Panama; Nicaragua; Sudan; Tunisia on the grounds that the
KAZ DZA
GTM
SVK AROSRB CRI
MDA UZB
data do not cover all sectors of the economy; Albania; Bahrain;
PHL
RWA
TMPLBN
UKR
BLR
RUS

COMOMN GHA
LAO
KGZ
UGA
CMR
BFA MOZ
0 IMOTZA
0 20 40
Percentage of Firms Expected to Pay Informal Payment (to Get Things Done)
Source: MSME Country Indicators, Enterprise Surveys.
Note: Figure uses data from 70 economies. The results of the
regression are statistically significant at the 5 percent level. When
controlling for GNI per capita, Atlas method (log), the results are
not statistically significant at the 5 percent level.
References
Buehn, Andreas and Schneider, Friedrich. 2009. “Shadow Economies
and Corruption All Over the World: Revised Estimates for 120
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E-Journal, Vol. 1, 2007-2009 (Version 2). http://dx.doi.
org/10.5018/economics-ejournal.ja.2007-9
Consultative Group to Assist the Poor. 2010. “Financial Access
2010.” http://www.cgap.org/p/site/c/template.rc/1.26.14234/
IFC and McKinsey & Company. 2010. “Two Trillion and
Counting.” http://www.ifc.org/ifcext/media.nsf/Content
IFC_McKinsey_SMEs
IFC. 2009. “SME Banking Knowledge Guide.” http://
w w w. i f c. o r g / i f c e x t / g f m . n s f / A t t a c h m e n t s B y T i t l e /
SMEBankingGuidebook/$FILE/SMEBankingGuide2009.pdf
Klapper, Leora, Amit, Raphael, and Guillén, Mauro F. 2010.
“Entrepreneurship and Firm Formation across Countries.”
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Research Conference Report. Chicago: University of
Chicago Press
Kushnir, Khrystyna. 2010. “How Do Economies Define
MSMEs?” IFC and the World Bank. http://www.ifc.org/
msmecountryindicators
Kushnir, Khrystyna. 2010. “Methodology Note on the MSME
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msmecountryindicators
Acknowledgments
The authors would like to acknowledge the valuable contributions
of Mohammad Amin, Roland Michelitsch, Peer Stein, and Hugh
Stevenson.
KHM
CHN
Georgia on the grounds that data come from surveys; Belize;
Brunei Darussaiam; Guatamala; Guyana; Iran, Islamic Rep. on
60 80
the grounds that data beyond 2000 are not available.
6. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
Panama; Nicaragua and Tunisia on the grounds that data do not
cover all sectors of the economy; Albania; Bahrain and Georgia
on the grounds that data come from surveys; Netherlands
Antilles; American Samoa; Bermuda; Guam; Myanmar;
Northern Mariana Islands; Qatar and the Virgin Islands (United
States) on the grounds that the data on GNI per capita, using the
Atlas method, are not available and Belize; Brunei Darussalam;
Guatemala; Guyana and Iran, Islamic Rep. on the grounds that
data beyond 2000 is not available.
7. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
Panama; Nicaragua and Tunisia on the grounds that data do not
cover all sectors of the economy; Albania; Bahrain and Georgia
on the grounds that data come from surveys; Belize; Brunei
Darussalam; Guatemala; Guyana and Iran, Islamic Rep. on the
grounds that data beyond 2000 is not available.
8. This result is statistically significant at the 1 percent level.
9. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
Panama; Nicaragua and Tunisia on the grounds that the data
do not cover all sectors of the economy; Albania; Bahrain
and Georgia on the grounds that the data come from surveys;
Netherlands Antilles; American Samoa; Bermuda; Guam;
Myanmar; Northern Mariana Islands; Qatar and Virgin Islands
(United States) on the grounds that data on GNI per capita,
Atlas method, are not available; Belize; Brunei Darussalam;
Guatemala; Guyana and Iran, Islamic Rep. on the grounds that
data beyond 2000 are not available; Timor-Leste; Burkina Faso;
Dominican Republic; Sudan; Tanzania and Venezuela, RB on the
grounds that data on employment by MSMEs are not available.
10. Excluded economies: Burkina Faso; Dominican Republic;
Iran, Islamic Rep.; Sudan; Timor Leste; Tunisia; Tanzania and
Venezuela, RB on the grounds that data are not available; Belize;
Brunei Darussalam; Guatemala and Guyana on the grounds that
data after 2000 are not available; Bolivia; Botswana; Cameroon
and Trinidad and Tobago on the gounds that data cover
enterprises in the private sector only; Canada and Tajikistan on
the grounds that data cover enterprises with no employees; Sri
Lanka and Mauritius on the grounds that data do not cover all
sizes of MSMEs; the West Bank and Gaza on the grounds that
data include governmental and non-governmental enterprises;
Montenegro on the grounds that there are no data on total
employment; Albania; Bahrain and Georgia on the grounds that
data come from surveys; Ethiopia; Nepal; Nicaragua; Panama
and Puerto Rico on the grounds that data do not cover all
sectors of the economy.

8
11. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
Panama; Nicaragua and Tunisia on the grounds that data do not
cover all sectors of the economy; Albania; Bahrain and Georgia
on the grounds that data come from surveys; Netherlands Antilles;
Bermuda; Guam; Malta; Myanmar; Northern Mariana Islands and
Virgin Islands (United States) on the grounds that they are not
covered by the Doing Business Index data; Qatar and American
Samoa on the basis that the data on GNI per capita, Atlas method
are not available. In addition, countries with minimum capital of
less than 5 percent of GNI per capita and those with minimum
capital above 200 percent of GNI per capita were also excluded to
minimize the possibility of results being driven by outliers.
12. Excluded economies: Ethiopia; Puerto Rico; Sri Lanka; Nepal;
Panama; Nicaragua and Tunisia on the grounds that data do not
cover all sectors of the economy; Albania; Bahrain and Georgia
on the grounds that data come from surveys; Netherlands Antilles;
Bermuda; Guam; Malta; Myanmar; Northern Mariana Islands and
Virgin Islands (United States) on the grounds that they are not
covered by the Doing Business Index data; Qatar and American
Samoa on the basis that the data on GNI per capita, Atlas method
are not available.

MSME Country Indicators is a joint work of Access to Finance, Global Indicators and Analysis, and Sustainable Business
Advisory. Visit MSME Country Indicators at http://www.ifc.org/msmecountryindicators. This publication carries
the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in
this note are entirely those of the authors. They do not necessarily represent the views of the International Bank for
Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the
World Bank or the governments they represent.