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Abstract
The article explores the role of small and medium-sized entrepreneurship as a key factor in the socio-economic development of Kostanay, examined as a "secondary city" of a border region. The aim of the work is to evaluate the contribution of business to the urban economy, analyze current challenges, and determine development prospects, taking into account foreign experience and national strategic priorities. The authors apply an integrated approach, including an analysis of strengths and weaknesses, as well as benchmarking against global best practices. The research results confirm the significance of the private sector for generating tax revenues and providing public employment. Key obstacles were identified, such as infrastructure wear and tear, a shortage of skilled personnel, and low innovation activity. The study justifies the need for a transformation of the development model: transitioning from a trade-dominant focus to an industrial-cooperative model that involves integrating small businesses into large manufacturing clusters and localization projects.