Competing in the Single Market - SMEs and ... - Erhvervsstyrelsen

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Figure 4: SMEs Share of Employment and Value Added, 1989-98Source: World Bank (2002)Despite some early reforms by the post-communist countries in the early 1990s (EuropeanCommission (2002e)), there are still significant structural barriers to SME development in thetransition economies as pointed out by the European Commission in its 2003 Implementation Reporton the European Charter for Small Enterprises in the Candidate Countries :Small enterprises in the Candidate Countries remain to a large extent underdeveloped. Newenterprises are mainly created in the traditional service sectors and there are only few innovativecompanies. The life cycle of companies is shorter than in the EU and the methods of the economictransition towards an open economy have not always been favorable to new and small enterprises.European Commission (2003j, p.18)Thus, although EU accession offers SMEs new export opportunities, it will also bring increasedcompetition in domestic markets (see also Box 5). While the more stringent quality and technicalstandards, coupled with an increase in the number of players, should lead to generally morecompetitive companies in the Accession Countries in the longer run, SMEs are currently at adisadvantage. The disproportionate effect (relative to larger enterprises) of compliance costs meansthat SMEs will have a more difficult time in capitalizing on the opportunities afforded by marketintegration. Experience from Western Europe suggests that the main market integration effects will36
e to the potential advantage of the strong and to the disadvantage of weaker SMEs. For example,firms that are already proactively managed, and with an existing presence in foreign markets, are inthe best position to take advantage of any new foreign market opportunities (Smallbone and Rogut,2003). For newer, or more regionally focused SMEs, market integration presents extreme challengesto growth and continued existence.The countries in transition (CITs) are well aware of these challenges, and have been taking longstrides in improving the institutional, legal and regulatory environment, reducing the administrativeburden, and developing business support programs to assist SMEs. 15 The B4 countries, in particular,have succeeded in supporting SME development in their countries, and are reckoned among thosecountries that are making rapid progress in this respect (see Table 10 below).Table 10: Classification of SMEs in Countries in TransitionCountries making rapid progressCountries with intermediate stage oftransitionCountries making slow progressCroatiaCzech RepublicEstoniaHungaryLatviaLithuaniaPolandSlovakiaSloveniaBulgariaKyrgyzstanRomaniaRussian FederationUzbekistanAlbaniaBosnia and HerzegovinaFYR MacedoniaMoldovaTajikistanTurkmenistanSource: UNECE (2003)At the same time, the B4 countries have very different levels of performance of their SME sectors.The UNECE has attempted to measure the development and achievements of SMEs in CITs throughits Index of SME Development 16 (UNECE 2003). The Index illustrates the performance of SMEsrelative to the overall economic performance in these countries, as measured by per capita product (inUSD). As Figure 5 illustrates, Slovenia and Hungary exhibit the best performance on this index, whilethe B4 countries exhibit varied performance. Among the B4, Poland ranks highest (3 rd ), followed byLatvia (4 th ), Estonia (6 th ) and Lithuania (9 th ).15One programme that should be mentioned here is the United Nations Economic Commission for Europe (UNECE)-initiated Programme for theDevelopment of SMEs in countries in transition (CITs), started in 1995. This programme has the goal of promoting policy and regulatory reforms to create anenabling environment for the development of entrepreneurship and creation of SMEs, and support the creation and strengthening of formal institutions thatprovide business development and financial institutions on a sustainable basis (UNECE 2003).16The Index for SME Development is a complex economic indicator that incorporates the share of the whole SME-sector in the overall performance of thenational economy based on three economic parameters: (i) the share of private ownership, (ii) the share of SMEs in GDP, and (iii) the share of the labourforce of SMEs in the total labour force of a country. In advanced emerging market economies, the Index of SME Development amounts to USD 500-2200per capita. The countries with intermediate stages of development have less than USD 500 per capita, and less developed countries in transition have less thanUSD 100 per capita.37
Page 1 and 2: Sylvia Schwaag SergerEmily HanssonC
Page 4 and 5: About the International Organisatio
Page 7: PREFACEAccession to the Single Mark
Page 10 and 11: enterprise development. There are n
Page 12 and 13: BOXESBox 1: The ‘Knowledge-Based
Page 15 and 16: INTRODUCTIONAfter more than 10 year
Page 17 and 18: CHAPTER 1: FROM STABILISATION TO IN
Page 19: increased competitive pressure as B
Page 22 and 23: Box 2: On Innovation and Innovation
Page 24 and 25: Table 5: GDP Growth 1995-2003 in Se
Page 26 and 27: Table 7: Relative Strengths and Wea
Page 28 and 29: Box 3: The Indicator ProblemExistin
Page 31 and 32: CHAPTER 2:BALTIC SMEs - AGENTS OF F
Page 33 and 34: Table 9: Average Annual Growth of S
Page 35 and 36: Box 4: Overview of Selected Multina
Page 37: The Role of SMEs in Transitional Ec
Page 41 and 42: A common measurement of business ac
Page 43 and 44: Figure 8: Labour Productivity per P
Page 45 and 46: Figure 10: Employment in Med/Hi-tec
Page 47 and 48: Summing up, there are fewer economi
Page 49 and 50: Overall, SMEs tend to lack the fina
Page 51 and 52: Figure 12: Enterprises with Innovat
Page 53 and 54: Figure 14: Proportion of Enterprise
Page 55 and 56: Table 14: Barriers to Innovation fo
Page 57 and 58: Some interesting examples of cluste
Page 59 and 60: CHAPTER 3:POLICIES PROMOTING SMEs A
Page 61 and 62: National governments themselves wil
Page 63 and 64: Institutional StructureIn all of th
Page 65 and 66: EU countries (innovation relay cent
Page 67 and 68: LITHUANIAAgency/OrganisationLithuan
Page 69 and 70: From the private sector, the chambe
Page 71 and 72: On the whole, the B4 have relativel
Page 73 and 74: LITHUANIAProgramme/Policy DocumentI
Page 75 and 76: Table 19: B4 National Rankings of A
Page 77 and 78: Box 11: Structural Funds to the Can
Page 79 and 80: Box 12: On SMEs and FinancingIt doe
Page 81 and 82: examples of evaluations of national
Page 83 and 84: CHAPTER 4:CHALLENGES AND RECOMMENDA
Page 85 and 86: General challengesBased on our own
Page 87 and 88: the above-mentioned channels. 27 On
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the EU average and particularly wit
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RecommendationsBased on the challen
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CHAPTER 5:A VISION OF A NORDIC-BALT
Page 95 and 96:
addition, they are the most advance
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countries. One such sign is the rap
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CONCLUSIONSEU accession will not re
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REFERENCESAlfonso, Antonio, Ludger
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European Commission (2003f), Compre
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Eurostat (2004a), SMEs in the Candi
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Statistical Office of Estonia (2004
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APPENDIX I:Agenda for Working Group
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DAY 2:POLICY SOLUTIONS9:30-10:30 In
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APPENDIX II:Participants in the IKE
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APPENDIX III:Conclusions from the I
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APPENDIX IV:Summary of the Panel se
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Regarding the role of policymaking,
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APPENDIX V:Description of Field Stu
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Mr. Miroslaw MarekMr. Talis Millers
Page 126:
IKED - International Organisation f
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