Small and Medium Enterprise
Approach Paper Evaluation of the World Bank Group’s Targeted Support for Small and Medium Enterprises
January 7, 2013 Background and Context
1. The World Bank Group seeks to promote private sector led growth to generate employment, shared growth and poverty alleviation.1 International research indicates the important role SMEs Figure 1: SME Share of Total Employment, by Country Income Category play in growing economies.2 2. As income levels increase, SMEs tend to comprise a larger share of economy, while the informal sector recedes. Studies of transition economies have also emphasized the strong role that new entry of SMEs played in generating employment and growth in economies such as 3 Poland, Vietnam and China. More broadly, it is recognized that inclusive growth involves a large and healthy SME sector, playing its role in generating employment, opportunity and competitive dynamism.4 Where market, policy and institutional failures thwart this role, reformers often seek to “level the playing field” to assure that smaller businesses have a fair chance to thrive and contribute to market-led growth. Thus this evaluation will review IFC, MIGA and World Bank targeted support activities for SMEs between fiscal years 2006 and 2012 to assess their relevance, efficacy and efficiency; and provide an overall assessment of their development effectiveness. 3. What do SMEs need to thrive? It is important to understand and address the developmental needs of SMEs, as part of broader efforts to promote inclusive private sector development. While definitions of SMEs vary widely, the current evaluation will
1
utilize the IFC definition – having 10 to 300 employees, and having less than U.S. $15 million in Figure 2: The policy and institutional framework for SME Development
Box 2: SME Literature Review, a Synthesis of Syntheses (sources of figure 2)
Source
1. 2.
Capital/ Labor/ Land/ Technology InfraProduct Legal and MacroTargeted Support Finance Skills Real
January 7, 2013 Background and Context
1. The World Bank Group seeks to promote private sector led growth to generate employment, shared growth and poverty alleviation.1 International research indicates the important role SMEs Figure 1: SME Share of Total Employment, by Country Income Category play in growing economies.2 2. As income levels increase, SMEs tend to comprise a larger share of economy, while the informal sector recedes. Studies of transition economies have also emphasized the strong role that new entry of SMEs played in generating employment and growth in economies such as 3 Poland, Vietnam and China. More broadly, it is recognized that inclusive growth involves a large and healthy SME sector, playing its role in generating employment, opportunity and competitive dynamism.4 Where market, policy and institutional failures thwart this role, reformers often seek to “level the playing field” to assure that smaller businesses have a fair chance to thrive and contribute to market-led growth. Thus this evaluation will review IFC, MIGA and World Bank targeted support activities for SMEs between fiscal years 2006 and 2012 to assess their relevance, efficacy and efficiency; and provide an overall assessment of their development effectiveness. 3. What do SMEs need to thrive? It is important to understand and address the developmental needs of SMEs, as part of broader efforts to promote inclusive private sector development. While definitions of SMEs vary widely, the current evaluation will
1
utilize the IFC definition – having 10 to 300 employees, and having less than U.S. $15 million in Figure 2: The policy and institutional framework for SME Development
Box 2: SME Literature Review, a Synthesis of Syntheses (sources of figure 2)
Source
1. 2.
Capital/ Labor/ Land/ Technology InfraProduct Legal and MacroTargeted Support Finance Skills Real