Publication: Turkey - Improving Conditions for SME Growth Finance and Innovation

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World Bank
Facilitating the growth of Small- and Medium-sized Enterprises (SMEs) is central to creating jobs for an underutilized and growing labor force in Turkey as SMEs account for 79 percent of jobs in Turkey. Creating jobs for Turkey's unemployed and for the rapidly growing labor force, though partly a social challenge, is an important economic opportunity. Turkish SME growth performance and productivity is currently poor, and these related challenges must be simultaneously addressed. First, Turkish SMEs grow slower than both large enterprises in Turkey and SMEs in comparator countries. Second, not only are SMEs in Turkey less productive than larger firms, but the gap across firm size is larger in Turkey than in other countries. Although growth and productivity may be affected by different aspects of the business environment, productivity is needed for firms to be competitive and thus be able to sustain growth in the long term. Therefore, growth and productivity must be simultaneously addressed to enable the sustainable creation of well paying jobs. The two main priorities for SMEs are: a) access to finance, and b) the ability to adopt and use technology and to innovate, and this report addresses these topics. The main constraint for the growth of SMEs is access to finance, and new microeconomic evidence shows that the development of medium term finance contributes significantly to SME performance in terms of employment, sales, and investment. Specific interventions in the form of credit guarantees and credit line financing of financial institutions dedicated to support SME financial products have been used to speed up the development of the SME medium term credit market, and they may continue to play a role.
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World Bank. 2011. Turkey - Improving Conditions for SME Growth Finance and Innovation. © Washington, DC. License: CC BY 3.0 IGO.
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