Institutional ecosystems and inclusive entrepreneurship: evidence from Uzbekistan’s transition economy

Small and medium-sized enterprises (SMEs) are widely regarded as engines of inclusive development, yet their welfare implications in post-transition economies remain insufficiently understood. This study examines how SME structure and investment behaviour are associated with regional poverty outcomes in Uzbekistan during its ongoing phase of market liberalization and institutional reform. Using harmonized cross-regional data for 14 regions (2023–2024), heteroskedasticity-robust ordinary least squares regressions assess associations between poverty rates and three SME indicators: density, investment intensity and industrial specialization. The results show that higher SME density and SME investment shares are significantly associated with lower poverty, while industrial specialization has no measurable effect. These findings suggest that entrepreneurial inclusiveness depends more on institutional and ecosystem coherence than on sectoral expansion alone. The study contributes to the SME–poverty literature by clarifying how regional entrepreneurship relates to institutional context in shaping welfare outcomes. Policy implications emphasize strengthening financial inclusion, governance capacity and locally embedded support networks to strengthen the inclusiveness of SME-led growth.