The Role of Micro, Small, and Medium Enterprises (MSMEs) in Driving Regional Economic Development in Indonesia

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of Indonesia's economy, particularly in rural and underserved regions. This paper explores the role of MSMEs in regional economic development, focusing on their contribution to employment, local entrepreneurship, and poverty alleviation. Through case studies of MSMEs in regions such as West Java, Bali, and Sulawesi, the paper examines how local entrepreneurs utilize regional resources and networks to create sustainable businesses. The study also explores the challenges MSMEs face, including limited access to finance, inadequate infrastructure, and regulatory barriers. The research contributes to understanding how policies can better support MSMEs by improving access to capital, markets, and technology, thereby fostering inclusive growth and reducing regional inequalities. The paper concludes with recommendations for strengthening MSMEs’ capacity to drive regional development, enhance economic resilience, and contribute to poverty reduction.