Resource information
Small and medium-sized enterprises
(SMEs) account for a lion's share of the enterprises in
most economies and are also thought to be an engine of new
growth and innovation. The focus of this paper is to take
the insights on SME mix and segments to practical
implications for developing countries around the world. The
paper attempts to do this by providing a diagnostic approach
that client countries and regions can use to assess their
SME sectors and tease out firms' contribution to the
local economy. Guidelines and specific examples of policies
based on the insights in the paper have been provided.
Lastly, the paper includes some areas of future research
that are required on the subject. This paper proceeds in
three steps. The first is to better understand the economic
contribution of SMEs. This analysis complements the existing
policy focus and takes it further to direct attention to a
more specific set of growth drivers to enable the firms that
matter disproportionately, the competitive SMEs, while
remaining inclusive and avoiding market distortion. The
second step is to develop a perspective on how best to
complement the policy focus on competitive SMEs with that on
larger firms. Policy-makers need to structure policy
appropriately to develop a healthy eco-system of firms. The
third step is to make this analysis actionable by
policy-makers. This paper provides an initial SME policy
diagnostic. A better understanding of how to encourage SME
growth has the potential to make a substantial contribution
to national economic performance.
