In the business world, small and medium enterprises have a long history of serving to provide employment opportunities to the people of the country. This increases the ability of individuals to become more innovative and cope with the unemployment crisis. Small and medium enterprises (SMEs) are considered the key to economic growth, innovation and employment growth, significant employment potential, income generation and technological progress in most savings. This is a very important sector in both developed and developing countries. In Pakistan, SMEDA defines small and medium enterprises, as approved in the SME Policy 2007, as an enterprise with up to 250 employees or paid-up capital of P25 million rupees. or an annual sale of up to PK 250 million. The Federal Government, depending on the economic development of Pakistan, may, from time to time, modify the eligibility criteria as it sees fit. All service providers receiving government funding can define smaller scopes for specific targeting purposes (Smeda, 2007). In developing countries like Pakistan, SMEs play a very important role in providing employment opportunities. SMEs provide a platform for people to start a business with minimum capital. The development of SMEs depends on many factors such as infrastructure, financing, labor force, location and market, political situation and public order. The structure of SMEs changes in terms of size, workforce, market and results as they grow. Recently, in the literature, there has been a question about the existence of SMEs with increasing economic development in developing countries. Another issue that requires research is the level of government support required for SME development (Tambunan, 2008). This study aims to address both questions in...... middle of article......c Studies, 4 (2). pp.ÿ113-136.ADB (2004), ADB to Help Foster Development of SME Sector in Bangladesh, Asian Development Bank, Mandaluyong, available at: www.adb.org2004. SMEs. Washington DC: World Bank Group Review of Small Business Operations. Narain, S. (2003), “Strengthening Institutional Capacity for the Promotion and Development of Small and Medium Enterprises”, Investment Promotion and Enterprise Development Bulletin for Asia and the Pacific, No. 2. Quddus, M. and Rashid, S. (2000), Entrepreneurship and economic development: the remarkable story of Bangladesh's garment exports McDowell, SD (1997). Globalization, liberalization and policy change: a political economy of the communications sector in India. Minton, AA (2006), “SMEs in Bangladesh” Harvie, C. (2003), The contribution of micro-enterprises to economic recovery and poverty reduction in East Asia.