Doing Business with the World - Mapeo de Promotores de RSE

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Enterprisedevelopment“Business is the most importantengine of economic change. Itbrings employment, goods,revenues, knowledge and skillsdevelopment. We must alsorecognize that the most importantrole is probably not that played bythe multinationals, but by the smalland medium enterprise sector, theSMEs. We as global companies canprovide the catalyst to partner withSMEs to mutual benefit. We canaccess their local expertise andmarkets; they can access ourtechnologies and business skills forlocal momentum.”Michael Pragnell, CEO, SyngentaThe global viewLocal entrepreneurs, microenterprisesand small and mediumenterprises (SMEs) form thebackbone of global economicactivity. These are small firms,defined either by their headcount –between 10 and 500 employees – orby their turnover. In OECDeconomies, they account for 95% offirms, 60%-70% of employment,55% of GDP and generate the lion’sshare of new jobs (see Figure 16).In developing countries, more than90% of firms outside the agriculturalsector are SMEs and microenterprises.They generate asignificant portion of GDP. 25SMEs contribute to wealth creationand generate tax revenues. A healthySME sector equates to a reduced levelof informal activities which, in manydeveloping countries, account for a significant but hidden portion of GDP –anywhere between 30% and 70%. These are economic activities conductedoutside the regulatory framework and include everything from casual labor tothriving SMEs and occasionally illegal activities (see Figure 17).SMEs bring social benefits, particularly in developing countries. They often havea vested interest in community development. As local entities, they draw uponthe community for their work force and rely on it to do business. Theyunderstand the communities within which they operate and are able to providegoods and services tailored to local needs and at costs affordable to local people.They are also a good source of employment for women, young people or lowskilledworkers who usually make up the greatest portion of the unemployed inemerging economies.SMEs can be valuable partners for large corporations. They are an importantsource of local supply and service provision. Their extensive local knowledgeof resources, supply patterns and purchasing trends makes them a goodsource of market information. Similarly, they represent an important sourceof innovation. They often occupy specialized market niches and followcompetitive strategies that set them apart from other companies. Theiractivities can include re-engineering products or services to meet marketdemands, exploring innovative distribution or sales techniques, ordeveloping new and untapped markets.Source: World Bank.2070%60%50%40%30%20%10%0%Low incomecountriesEmploymentGDPMiddle incomecountriesHigh incomecountriesFigure 16: SME contribution to employment and GDP – median values50454035302520151050Percentage ofofficial GDPAfricaCentral andSouth America1999/20002000/20012001/2002AsiaTransitioncountriesFigure 17: Average size of the informal economy as a % of GDPHighly developedOECD countriesSource: Schneider, Friedrich. “Size and Measurementof the Informal Economy in 100 Countries around theWorld”. Working Paper. 2005-13. Center for Researchin Economics, Management and the Arts, JohannesKepler University of Linz. 2005.
Societal needsSMEs in developing countries are oftenunable to fulfill their potential becauseof prevailing regulatory frameworks.Government legislation and policymakersfrequently overlook SMEs infavor of large corporations or microenterprises.Tax incentives or businesssubsidies that could aid enterprisedevelopment are often lacking, whilethe sheer burden and weight ofbureaucracy in many emergingeconomies means that only the largestcompanies are able to devote theresources required to cutting throughred tape (see Figure 18). Compoundingthis are other institutional obstacles,including poorly implementedcompliance mechanisms, ill-definedintellectual or property rights, absentinvestor protection and corruption.The result is often a large, and thriving,informal sector, either because theSMEs cannot join the formal economyon account of the lack of a favorableregulatory framework, or because theyhave deliberately chosen to remaininformal since the costs and proceduralburden of joining the formal economyoutweigh the benefits.Enterprises operating in emergingeconomies often lack the skills base tobe truly competitive. Frequently,entrepreneurs do not have themanagerial proficiency to manage abusiness effectively. Similarly, lack ofknow-how and a poorly trained laborforce, compounded by poor levels ofeducation and widespread illiteracyamong the potential labor pool, renderthese problems more acute.Enterprises based in developingcountries frequently lack infrastructureand necessary technology. A dearth offinancial resources results in theiroperating with unsophisticated andoutdated production facilities. Thesecan be inefficient and have negativeenvironmental impacts.Finally, enterprises in emergingeconomies often have limited access tofinance and investment capital. Largecorporations have little difficultysecuring sizeable bank loans andprivate investment. At the same time,microfinance, consisting of very smallloans, is sometimes available toindividual entrepreneurs. SMEs fallbetween these two poles. They havesignificant difficulties obtaining thelevels of finance required for them toscale up their activities and attractfurther financing and investment. Forexample, the Inter-AmericanDevelopment Bank (IDB) estimates thatalmost 90% of entrepreneurs in LatinAmerica are obliged to tap into theirpersonal savings for financing.Source: World Bank. Doing Business Report. 2007.GhanaPeruEcuadorKenyaSpainHondurasColombiaNigeriaNicaraguaSouth AfricaIndiaChinaTanzaniaGuatemalaRussiaMexicoChileEl SalvadorGermanyJapanKoreaUnited KingdomRwandaNorwayTurkeyFranceUnited StatesAustraliaCongo, Dem. Rep.Brazil0 20 40 60 80 100 120 140 160 180Figure 18: Number of days required to start a business21
Page 1 and 2: Doing Businesswith the WorldThe new
Page 3 and 4: Table of contentsStatement of inten
Page 5 and 6: To align our core business strategi
Page 7 and 8: Population shiftsAnother concept th
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Page 11 and 12: Societal needsThe 2005 Millennium E
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Page 15 and 16: Societal needsEducation is a key fa
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Page 19 and 20: India has an even more severeproble
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Page 27 and 28: In comparison, official development
Page 31 and 32: Societal needsThere is growing cons
Page 35 and 36: death are diarrhea, malaria,pneumon
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Page 39 and 40: Average annual growth rate:2000-205
Page 41 and 42: How businesscan contributeBusiness
Page 43 and 44: Societal needsDespite robust econom
Page 47 and 48: Societal needsThe world faces a glo
Page 51 and 52: In particular, large corporations c
Page 53 and 54: Press Release. “Aid for tradecapa
Page 55 and 56: About theWBCSDWBCSDThe World Busine

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