Elias, Birhanu (PhD)Tamirat, Ertiro2019-10-112023-11-042019-10-112023-11-042019-05http://etd.aau.edu.et/handle/123456789/19399A Thesis Submitted to the Department of Public Administration and Development Management of Addis Ababa University in Partial Fulfillment of the Requirements for the Degree of Masters in Public Management and Policy (MPMP)The main goal of this research was to assess the challenges and economic contributions of Small and Medium Enterprises (SMEs) for the local economic development (LED) in Addis Ketema sub city, Addis Ababa, in related to the provision of employment opportunities and innovation of new products in the study area. For the sake of achieving the objectives of this study, mixed methods research design was employed, both primary & secondary data were used; primary data were collected using questioner & interviews. The information gleaned through pretested questionnaire from sample respondents of 120 operators of small manufacturing enterprises. The respondents were selected using quota sampling technique, 40 respondents each from metal work, wood work & textile manufacturing SMEs in purposive manner. The data are analyzed by using table, percentage, pie chart, grand mean and standard deviation. The study focused on the effects of Capital, raw materials skilled labor, infrastructure & market linkage, on productivities, employment opportunity and innovation created by manufacturing SMEs in the study area. The finding of the study ranking major challenges that affect performance of small manufacturing enterprises are lack of market linkage, capita, infrastructure, row materials and Skilled man power resulted in poor creation of employment opportunity and innovation for the local economic development. Based on the above findings, the key recommendations made to government bodies are like; government institutions at different level should able to create sufficient market linkage, provide affordable source of capital or finance, production spaces or shades, strengthening of SMEs by regular and continues training for SMEs to enhance innovation; as a result SMEs will play crucial role in LED.en-USEmployment opportunitiesInnovationLocal Economic DevelopmentThesis