Publication: Competitive Small and Medium Enterprises : A Diagnostic to Help Design Smart SME Policy
Loading...
Date
2013-05
ISSN
Published
2013-05
Author(s)
Editor(s)
Abstract
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.
Link to Data Set
Citation
“Tewari, Parth S.; Skilling, David; Kumar, Pranav; Wu, Zack. 2013. Competitive Small and Medium Enterprises : A Diagnostic to Help Design Smart SME Policy. © World Bank. http://hdl.handle.net/10986/16636 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Transforming East African ICT Sector by Creating a Business Engine for SMEs(World Bank, Washington, DC, 2011)For the purposes of this project, the East African countries included in the study were Kenya, Rwanda, Tanzania, and Uganda. The focus for this project was Small and Medium-sized Enterprises (SMEs) as for-profit or nonprofit organizations with less than 50 employees and not exceeding USD 1,000,000 in annual revenues/turnover. The main output of this project was a proposed program of interventions to drive transformational change. To succeed in this ambitious endeavor, the project articulated clear objectives and designed a blueprint for implementation including levels of resourcing, budget and monitoring metrics. Over the course of the project the team conducted brief surveys with over 90 entrepreneurs, over 50 percent of who had 3-10 years of experience in the Information and Communication Technology (ICT) sector and primarily worked at companies with 5 employees or less.Publication Nuturing Innovation : Venture Acceleration Networks, A Review of Existing Models(Washington, DC, 2011-08)This report evaluates the role, operational models and identifies good practices of programs that seek to accelerate innovative entrepreneurship by managing, nurturing and leveraging social and business networks. The report discusses the role of venture acceleration networks, using networks to support entrepreneurs, creating strong networks, selecting ventures, financing the program, choosing an organizational structure, adapting to the innovation ecosystem and the role for the public sector in Russia. The second part of the report describes individual programs. The conclusion suggests next steps for operationalizing a venture acceleration network in Russia. Venture acceleration network experiments highlight a multitude of challenges. Some face challenges linked to the environments where they operate. Where there is no local pipeline of coachable ventures or of mentors with the right mix of skills, experience and connections, programs do not succeed. Programs also face an uphill challenge where there is no local access to complementary forms of public and private support.Publication Investment Climate Reforms and Job Creation in Developing Countries : What Do We Know and What Should We Do?(World Bank Group, Washington, DC, 2014-09)This paper reviews the literature on the role of the investment climate reforms in job creation. It finds that the current landscape of employment and private sector activity in developing countries indicates a number of potential channels through which investment climate reforms can positively affect job creation. However, rigorous empirical evidence is scarce and most of the relevant studies focus on business entry reforms with a few focusing on business taxation and investment promotion activities. Overall, there is evidence of job creation through business entry, tax reforms, and investment promotion activity in developing countries. Almost all of these evidences are from quasi-experimental studies that are significant improvements over conventional cross-country or cross-section panel data analysis. Still, various endogeneity concerns in these studies cannot be ruled out completely. In assessing job effects, future research should provide deeper insights on the gross versus net and short-run versus long-run job effects and general equilibrium effects of various investment climate reforms related to jobs, productivity, competition, and other developmental outcomes. Another critical agenda for future research is to shed light on which investment climate reforms matter most for spurring the employment and productivity growth of firms in developing countries. The World Bank Group, in partnership with development partners and client government countries, can play a significant role in bridging the current knowledge gap by integrating rigorous evaluation as an integral part of project design and implementation, and improving data quality, particularly through its information and communication technologies-led private sector development reform initiatives.Publication Fostering Entrepreneurship in Azerbaijan(Washington, DC: World Bank, 2013-09-04)A dynamic and vibrant private sector is crucial to economic growth, with firms making new investments, creating jobs, improving productivity, and promoting growth. Entrepreneurial activity is pivotal to the continued dynamism of the private sector, as the generation of new businesses fosters competition and economic growth. This is particularly relevant for Azerbaijan, whose government faces a central challenge to create conditions that will facilitate growth in nonoil tradable sectors. The core objectives of Azerbaijan's development strategy are to diversify the economy away from the oil sector and sustain high employment and growth. Encouraging high-growth entrepreneurship can help Azerbaijan achieve these goals as it moves toward new opportunities in value added and tradable sectors. This study shows that high-growth entrepreneurialism is low in Azerbaijan and that innovative activity among firms is very low. Several factors hinder business growth and entrepreneurship: lack of competition, especially among smaller firms; financial systems that are not conducive to business development. Companies cite high interest rates and risk-averse lending policies as substantial hindrances to expansion. In addition, risk capital is in short supply; and lack of industry-relevant skills. The government could play an important role by removing bottlenecks that impede entrepreneurialism in the general business environment as well as by designing new financial policy instruments that foster entrepreneurship and innovation. In doing so, the government needs to exercise care that the design and management of these instruments prevent capture or corruption and promote efficiency. Lack of competition is an issue in Azerbaijan, particularly for Small and Medium Enterprises (SMEs), which face uneven treatment within the enterprise sector.Publication Enabling International Market Linkages : Lessons and Insights(Washington, DC, 2014)Growth-oriented entrepreneurs, especially those in small countries and those that are highly innovative, often look to international markets to grow their business. From a development perspective, entrepreneurs successful expansion into international markets can mean revenue growth and job creation at the enterprise level, along with spillover effects into innovation, industry competitiveness, and foreign exchange on a broader economic level. However, entrepreneurs do not always have the necessary know-how and networks to expand beyond their national market, nor do they have effective resources they can draw upon to gain access to the required knowledge and contacts. InfoDev focuses on enabling the growth of early-stage enterprises across the developing world. During 2010 - 2013, infoDev piloted a few approaches to enable international market access for small, relatively early-stage, growth-oriented enterprises. In total, about 200 enterprises from more than 35 countries participated in these pilots. The results and lessons from these pilot projects summarized in this document provide insights for practitioners who are considering increasing international market access for early stage entrepreneurs. Recommendations as to further research in this field are also provided.
Users also downloaded
Showing related downloaded files
Publication Poverty and Shared Prosperity 2018(Washington, DC: World Bank, 2018-10-17)The World Bank Group has two overarching goals: End extreme poverty by 2030 and promote shared prosperity by boosting the incomes of the bottom 40 percent of the population in each economy. As this year’s Poverty and Shared Prosperity report documents, the world continues to make progress toward these goals. In 2015, approximately one-tenth of the world’s population lived in extreme poverty, and the incomes of the bottom 40 percent rose in 77 percent of economies studied. But success cannot be taken for granted. Poverty remains high in Sub- Saharan Africa, as well as in fragile and conflict-affected states. At the same time, most of the world’s poor now live in middle-income countries, which tend to have higher national poverty lines. This year’s report tracks poverty comparisons at two higher poverty thresholds—$3.20 and $5.50 per day—which are typical of standards in lower- and upper-middle-income countries. In addition, the report introduces a societal poverty line based on each economy’s median income or consumption. Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle also recognizes that poverty is not only about income and consumption—and it introduces a multidimensional poverty measure that adds other factors, such as access to education, electricity, drinking water, and sanitation. It also explores how inequality within households could affect the global profile of the poor. All these additional pieces enrich our understanding of the poverty puzzle, bringing us closer to solving it. For more information, please visit worldbank.org/PSPPublication Poverty and Shared Prosperity 2016(Washington, DC: World Bank, 2016-10-02)Poverty and Shared Prosperity 2016 is the first of an annual flagship report that will inform a global audience comprising development practitioners, policy makers, researchers, advocates, and citizens in general with the latest and most accurate estimates on trends in global poverty and shared prosperity. This edition will also document trends in inequality and identify recent country experiences that have been successful in reducing inequalities, provide key lessons from those experiences, and synthesize the rigorous evidence on public policies that can shift inequality in a way that bolsters poverty reduction and shared prosperity in a sustainable manner. Specifically, the report will address the following questions: • What is the latest evidence on the levels and evolution of extreme poverty and shared prosperity? • Which countries and regions have been more successful in terms of progress toward the twin goals and which are lagging behind? • What does the global context of lower economic growth mean for achieving the twin goals? • How can inequality reduction contribute to achieving the twin goals? • What does the evidence show concerning global and between- and within-country inequality trends? • Which interventions and countries have used the most innovative approaches to achieving the twin goals through reductions in inequality? The report will make four main contributions. First, it will present the most recent numbers on poverty, shared prosperity, and inequality. Second, it will stress the importance of inequality reduction in ending poverty and boosting shared prosperity by 2030 in a context of weaker growth. Third, it will highlight the diversity of within-country inequality reduction experiences and will synthesize experiences of successful countries and policies, addressing the roots of inequality without compromising economic growth. In doing so, the report will shatter some myths and sharpen our knowledge of what works in reducing inequalities. Finally, it will also advocate for the need to expand and improve data collection—for example, data availability, comparability, and quality—and rigorous evidence on inequality impacts in order to deliver high-quality poverty and shared prosperity monitoring.Publication The African Continental Free Trade Area(Washington, DC: World Bank, 2020-07-27)The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world, measured by the number of countries participating. The pact will connect 1.3 billion people across 55 countries with a combined GDP valued at $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty by 2035. But achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures. The scope of the agreement is considerable. It will reduce tariffs among member countries and cover policy areas, such as trade facilitation and services, as well as regulatory measures, such as sanitary standards and technical barriers to trade. It will complement existing subregional economic communities and trade agreements by offering a continent-wide regulatory framework and by regulating policy areas—such as investment and intellectual property rights protection—that have not been covered in most subregional agreements. The African Continental Free Trade Area: Economic and Distributional Effects quantifies the long-term implications of the agreement for growth, trade, poverty reduction, and employment. Its analysis goes beyond that in previous studies that have largely focused on tariff and nontariff barriers in goods—by including the effects of services and trade facilitation measures, as well as the distributional impacts on poverty, employment, and wages of female and male workers. It is designed to guide policy makers as they develop and implement the extensive range of reforms needed to realize the substantial rewards that the agreement offers. The analysis shows that full implementation of AfCFTA could boost income by 7 percent, or nearly $450 billion, in 2014 prices and market exchange rates. The agreement would also significantly expand African trade—particularly intraregional trade in manufacturing. In addition, it would increase employment opportunities and wages for unskilled workers and help close the wage gap between men and women.Publication Poverty and Shared Prosperity 2020(Washington, DC: World Bank, 2020-10-07)Previous Poverty and Shared Prosperity Reports have conveyed the difficult message that the world is not on track to meet the global goal of reducing extreme poverty to 3 percent by 2030. This edition brings the unwelcome news that COVID-19, along with conflict and climate change, has not merely slowed global poverty reduction but reversed it for first time in over twenty years. With COVID-19 predicted to push up to 100 million additional people into extreme poverty in 2020, trends in global poverty rates will be set back at least three years over the next decade. Today, 40 percent of the global poor live in fragile or conflict-affected situations, a share that could reach two-thirds by 2030. Multiple effects of climate change could drive an estimated 65 to 129 million people into poverty in the same period. “Reversing the reversal” will require responding effectively to COVID-19, conflict, and climate change while not losing focus on the challenges that most poor people continue to face most of the time. Though these are distinctive types of challenges, there is much to be learned from the initial response to COVID-19 that has broader implications for development policy and practice, just as decades of addressing more familiar development challenges yield insights that can inform responses to today’s unfamiliar but daunting ones. Solving novel problems requires rapid learning, open cooperation, and strategic coordination by everyone: from political leaders and scientists to practitioners and citizens.Publication Doing Business 2020(Washington, DC: World Bank, 2020)Doing Business 2020 is the 17th in a series of annual studies investigating the regulations that enhance business activity and those that constrain it. It provides quantitative indicators covering 12 areas of the business environment in 190 economies. The goal of the Doing Business series is to provide objective data for use by governments in designing sound business regulatory policies and to encourage research on the important dimensions of the regulatory environment for firms.