Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth: OECD 2018 Ministerial Conference on SMEs

Foreword
Acknowledgements
Executive Summary
1.  Key Issues
	SMEs are key to strengthening productivity, delivering more inclusive growth and adapting to the major transformations of our time
		SMEs are the main source of jobs in the business sector
		Innovation is often driven and diffused by new and established SMEs
		SMEs are central to efforts to ensure growth is more inclusive
	SMEs are very heterogeneous in their characteristics and performance
	SME productivity performance varies across firms, and the persistent gap with large firms affects growth potential and income distribution
	Enabling SMEs to scale up and innovate can have a considerable economic and social impact
		Young and high-growth SMEs create jobs and bring a range of benefits to the economy…
		Scaling up and innovation are at the reach of many SMEs
	Digitalisation offers new opportunities for SMEs to participate in the global economy, innovate and grow
		… but SMEs are lagging behind in the digital transition
	Better access to global markets and knowledge networks can strengthen SMEs’ contributions
		… but SMEs are more affected by trade restrictions than larger firms
	The new industrial revolution, changing nature of work and demographic trends present new opportunities and challenges for SMEs
	A sound business environment is essential for SME competitiveness and growth
	Financing in the appropriate forms is important to enable small businesses to start up, develop and grow
		Implementing the G20/OECD High Level Principles on SME Financing can enable SMEs to access finance in the appropriate forms and volumes
	Entrepreneurship competencies and management and workforce skills also drive business innovation and growth
	Monitoring and evaluation of SME policies are needed to deliver strong outcomes
	A holistic, cross-cutting perspective on SMEs is needed to seize the potential for SME growth in a rapidly evolving context
	References
2.  Enabling SMEs to Scale Up
	The scaling up of SMEs is key to boost productivity and achieve inclusive growth
	Productivity growth is faster when businesses can grow… and shrink
	SMEs can experience high-growth at different stages of their life cycle, generating benefits for the economy
	… but high growth is a transitory stage in the life of firms
	Start-ups that scale up provide a key contribution to job creation…
	… but post-entry growth of start-ups varies widely across countries
	Medium-sized enterprises that scale up are key drivers of competitiveness
	SMEs can achieve scale through different mechanisms, including external growth
	Digitalisation is a powerful engine to scale up, enabling new modes of growth
	Participation in global markets and GVCs can also spur growth
	Policy can play a role in enabling SMEs to scale up
		Improved access to finance is needed to boost SME scale-up
		Strong entrepreneurial and management skills and access to talent are necessary for SME growth…
		…as are access to knowledge and the ability to innovate
		Framework policies are critical to unleashing the growth potential of young firms and SMEs, especially in high-risk sectors
		Effective contract enforcement and civil justice system support firm growth
		Potential disincentives to scaling up should be considered when devising size-contingent policies
	A coordinated policy approach is needed to devise mutually reinforcing policies for SME scale-up
	Notes
	References
3.  Enhancing SME access to diversified financing instruments
	Access to finance is key to the creation, growth and productivity of SMEs
	Longstanding challenges in accessing bank finance limit SME growth in many countries
	The recovery in SME lending following the crisis has been uneven
		Certain categories of firms and entrepreneurs face higher barriers to accessing bank finance…
		…as do many SMEs in emerging economies, in part because of high levels of informality
	Overall, SMEs remain too dependent on straight debt …
		… in a context of less credit as the “new normal”
	There are opportunities for SMEs to tap into a wide range of alternative financing instruments
		…but the development and use of alternative financing instruments by SMEs is highly uneven
		…and remain underdeveloped due to a number of demand- and supply-side barriers markets
	The digital transformation offers new opportunities to improve SME access to finance
	The G20/OECD High Level Principles on SME Financing provide a comprehensive framework for policy makers
	Governments have been stepping up efforts to foster a diversified financial offer for SMEs
		Improving SME skills and strategic vision for their financing needs
		Designing effective regulation that balances financial stability and the opening of new financing channels for SMEs, including through digitalisation
		Developing information infrastructures to reflect more accurately the level of risk associated with SME financing and encourage investors’ participation
		Leveraging private resources and develop appropriate risk-sharing mechanisms with the private sector
		Improving the evidence base
	Notes
	References
4.  Fostering greater SME participation in a globally integrated economy
	Better access to global markets is key to strengthening SME contributions to economic development and social well-being
		SMEs tend to be under-represented in international trade
	Changes in the global trading environment offer new opportunities for SMEs
		….through GVCs…
		… as exporters…
		… as suppliers to larger firms that export
		… and as importers of competitively priced foreign inputs and technologies
		… but these gains may vary by position as well participation in GVCs
	A range of internal and external factors influence SMEs’ ability to participate in global markets
		Internal factors
			Innovation
			Technology adoption
			Management and human capital
		External factors
			Access to finance
			Access to information
			Bottlenecks in infrastructure and distance
			Intellectual property
	SMEs are adapting their internationalisation strategies for the 21st century
		Digital platforms reduce trade costs and increase SME involvement in trade
		… but services restrictions hit SMEs harder than larger firms
		… and 21st century trade requires digital connectivity
	Policies can enable SMEs to integrate into global markets
	Creating a supportive domestic and international operating environment for SMEs takes a whole-of-government approach
	Notes
	References
5.  Improving the business environment for SMEs through effective regulation
	Why does it matter?
	What are current trends and challenges?
	What are key areas for policy to consider?
	Notes
	Further Reading
6.  Business transfer as an engine for SME growth
	Why does it matter?
	What are current trends and challenges?
	What are key areas for policy to consider?
	Notes
	Further Reading
7.  Developing entrepreneurship competencies
	Why does it matter?
	What are current trends and challenges?
	What are key areas for policy to consider?
	Notes
	Further Reading
8.  Promoting innovation in established SMEs
	Why does it matter?
	What are current trends and challenges?
	What are key areas for policy to consider?
	Further reading
9.  Strengthening social inclusion through inclusive entrepreneurship
	Why is it important?
	What are current trends and challenges?
	What are key areas for policy to consider?
	Further Reading
10.  Monitoring and evaluation of SME and entrepreneurship programmes
	Why is it important?
	What are current trends and challenges?
	What are the key areas for policy to consider?
	Notes
	Further Reading
		Annex A. Conference Programme
Annex A. Conference Programme
Annex B. Declaration on Strengthening SMEs and Entrepreneurs for Productivity and Inclusive Growth
Annex C. Chair’s Summary