Volume 1 Cedric - revised luca Final - RUIG-GIAN

5. Supporting the SMEs sector in the FYROM:Generic problematics and contextualizedpriority areasEconomic literature and international development agendas have unanimouslyrecognized the development of the SME sector as a condition for sustainable economicdevelopment, and a ‘backbone and driving force for a sustainable economy’, 103 in thedeveloped as well as in the developing world. Private sector development, and particularlythe strengthening of the SME sector, now appears prominently in international and nationaldevelopment strategies as a means to: promote full employment; improve access to incomeearning opportunities; increase economic participation of disadvantaged and marginalizedgroups; balance regional and local development; provide suitable goods and services tolocal markets; improve job quality, working conditions and access to social protection. 104The analysis below builds on an action-oriented interpretation of the field research todraw broad conclusions as far as the key constraints to be addressed for the development ofthe sector. 105 Main directions of an SME policy are proposed, building on the considerableexperience acquired internationally for an upstream effort at consolidating and developingthe sector. Such a discussion is relevant to the promotion of employment-intensive andsustainable growth for any country in the developped, transition or developing worlds. Inthe FYROM, the relevance of such discussion is compounded by the double context oftransition to the market economy (with the development of the private sector and tacklingof the social impacts of the transition) and the continuing inter-community instability.Following an overview of the SME sector in the FYROM, policy recommendationsare proposed on the general policy and regulatory framework, the access to credit, locallevelinitiatives and the issue of the dissemination of entrepreneurial skills and culture.5.1. The development of the SME sector in the FYROMin the context of the transition to the marketeconomy5.1.1. A flourishing private sectorThe privatization process in the Republic of Macedonia started in the early 1990swith the Law on Social Capital (June 1993), under which 450 (mostly large)establishments underwent owner-restructuring. In parallel to this voluntarist approach, thetransition has been marked by the development of private enterprise initiatives, with adramatic development of the SME sector.As a result, in 2001 the number of active companies in Macedonia was 34,716,employing 292,526 people. 98.3 per cent of these companies were small companies (10 to49 employees), employing 40.8 per cent of the total workforce, and 1.4 per cent were103 ‘Promo ting Small and Medium-Sized Enterprises. Final Declaration.’ OSCE Parliamentary Assembly, May2003. www.unece.org/indust/sme/bern.pdf104 Guide to ILO Recommendation No. 189, Job Creation in Small and Medium-Sized Enterprises, ILO, Geneva,pp. 4 to 5.105 This analysis, conducted in 2004/2005 builds here on a profile of the SME sector as emerging from the surveyconducted in 2001. This limitation, linked to the history of this particular study, was mitigated by a recent deskresearch that allowed to focus on the pertinent and up-to-date challenges of the sector in 2005.124