Abstract
How SME development affects poverty reduction and income inequality remains a contested issue, particularly in transition economies characterized by structural and regional disparities. Existing studies often treat SMEs as a homogeneous phenomenon. As a result, evidence on the relationship between SME development, multidimensional poverty, and income inequality remains limited. This study examines the relationship between SME development, multidimensional poverty, and income inequality across 15 regions of Kazakhstan during 2005–2024 using panel data and Driscoll–Kraay estimators. Poverty is assessed using incidence, depth, and severity. SME development is measured using indicators capturing quantitative expansion and qualitative contribution. The findings identify unemployment and income inequality as the most robust drivers of poverty. Income growth reduces poverty depth and severity but is also associated with higher income inequality. SME development exhibits heterogeneous socioeconomic effects. Indicators reflecting SME value added are associated with lower poverty and inequality, whereas increases in the number of enterprises or SME output do not necessarily improve social outcomes and may be linked to higher poverty intensity. The results indicate that the developmental impact of SMEs depends on productivity, value creation, and structural transformation rather than enterprise quantity, highlighting the importance of quality-oriented SME policies for inclusive growth.