Small and medium enterprises are facing a situation of diversified consumer demand patterns, more outsourcing in industrial production strategies and new technologies. The policy thrust is to enhance the capability of small industries to perform effectively in this context.
Structural changes in several economies have led to a shift in industrial production of SMEs from construction and low-tech manufacture to high-tech industries. A brief overview of the policy thrust for SMEs in recent years in some of the major industrial countries is given below.
In the European Union, SMEs total 13.5 million and account for 40 per cent of employment in the E.U. (J.G.Vianen, 1993: 137). Their importance is considerable in economies such as Germany and Italy.
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In Germany, SMEs contribute almost half the GNR Italy has promoted SME growth successfully through the development of clusters – or mutually supporting groups of industries – which has proved an effective strategy in terms of resource-use efficiency.
Policy interventions for SMEs in developed countries vary in terms of focus, though the broad thrust is in the areas of finance, technological and entrepreneurial development. It is estimated that there are over 400 major programmes, projects, initiatives or other instruments in the EU countries explicitly focusing on SMEs (J.G. Vianen, 1993; 139).
Policies range from Manufacturing, Planning and Implementation Studies Programme (MPI) and Small Firms Merit Award for Research and Technology (SMART) for advanced manufacturing technology support in the UK to Canada’s Entrepreneurial Awareness Programme (EAP). Denmark has implemented several measures to improve business conditions for SMEs with a focus on development of technological structure.
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Norway’s policies for SMEs have an emphasis on access to financial resources. The Small Business Fund, the Regional Development Fund and the Industrial fund within the State Bank system have been set up to further this objective.
Turkey has adopted major policy initiatives for SMEs which comprise about 98 per cent of all manufacturing establishments in the country. These initiatives include the establishment of co-operatives and setting up of industrial estates. (OECD Report, 1992: 57).
In the East Asian region, industrial policies for SMEs have been shaped in a wide range of economic, social and political contexts. During the last three decades, most countries of the region with export-oriented growth strategies made the transition from export-based labour-intensive industries to technology-intensive industries.
The broad policy thrust in countries of the region has been: to expand the capability of SMEs to generate employment, promote exports, and facilitate the development of appropriate technologies and new entrepreneurial skills. (Annexure 1.2 summarises policy initiatives for SMEs in selected countries).