Influence of household income on the development of small and medium-sized businesses: An international comparative analysis

Abstract

This study was aimed at analysing the impact of household incomes on the development of small and medium-sized businesses (SMEs) on the example of Kyrgyzstan and developing recommendations for the implementation of international experience in the country. The research methodology included the collection and analysis of statistical data to estimate the average monthly nominal wage using the arithmetic mean. The method of economic and statistical analysis was used to compare wages in Kyrgyzstan with similar indicators in other countries using Wilcoxon t-test, and to analyse the economic performance of SMEs for the period 2017-2023. The study found that a high level of household income contributes to an increase in consumer demand and stimulates the development of SMEs through increased sales and investment. However, low household incomes have a negative impact on purchasing power and, consequently, on the sustainability and profitability of businesses. It has been found that household incomes play a decisive role in shaping the demand for goods and services, which directly affects the activity and growth of SMEs in the country. The wage level in Kyrgyzstan was found to be extremely low and significantly different from the average wage level in other countries. The study also identified the main challenges that hinder the successful development of SMEs in Kyrgyzstan, including a complex bureaucratic environment, insufficient financial support, high poverty levels, and a lack of investor protection. As a result, a set of recommendations was developed to improve the conditions for SME development in Kyrgyzstan. The implementation of these recommendations will create favourable conditions for the growth and development of SMEs in Kyrgyzstan, contributing to the country’s economic sustainability and social development.