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Unleashing MSMEs as an Engine of Inclusive Growth

Posted: 2012-11-24

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Private sector agents spanning micro, small and medium scale enterprises (MSMEs) to large corporations play a critical role in sustained job creation, innovation, and investment in many developing countries. However, enterprise performance and productivity particularly of smaller firms tend to lag behind larger firms. Many lack entrepreneurial skills and the capacity to innovate at the firm level. But more than the obstacles internal to the firm, institutional and policy environments are great contributors why MSMEs fail to be an engine of inclusive growth. For instance, the provision of public goods spanning various regulatory, environmental, and other factors could influence competitiveness, and the firm’s ability to expand, innovate and generate pro-poor jobs.

Different reforms are hence crucial to unblock the constraints confronted by these enterprises. However, the tools required to craft appropriate policy reforms like firm-level data are sparse in many developing countries such as the Philippines. Without this detailed information, policies may not necessarily respond to the different challenges faced by micro, small and medium scale firms, resulting in one-size-fits-all strategies that may not work at all.

Drawing on the regional expertise on enterprise development, this workshop would discuss the important issues of governance, financing, firm resiliency to shocks, corruption, and pro-poor job creation of MSMEs that are needed for them to serve as an engine of inclusive growth. The workshop will also discuss the challenges of collecting firm-based data, which would feedback into the survey design of a potential ADB-APC survey on enterprises to be fielded in early 2012.

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