EIRP Proceedings, Vol 13 (2018)

Abstract

This paper examines the effect of government policies affecting the development of SMEs. SMEsare promoters of economic development, but being small, they are also very vulnerable to the unfavorablebusiness environment thus they need to be supported. The paper will specifically address the impact ofgovernment subsidies and loans in supporting the development of the first SMEs in their turnover. Kosovo is acountry in transition therefore it is expected that these effects will be interesting, as the opportunities ofgovernment institutions to help them are very poor either by the lack of means or by the wrong allocation offunds in sectors that have no influence in the economy. The analysis of the results was done using econometricmodels such as simple OLS regression and auto-correlation vector analysis VAR. There are many studies thathave provided different opinions about the effects of these supporting policies on SME development. Hence,their findings and results from empirical analysis will draw useful conclusions and recommendations.