Small and medium-sized enterprises (SMEs) are the engines of global economic growth and employment, accounting for, on average, 33% of GDP and 45% of the workforce in high-income countries, and over 60% of GDP and 70% of employment in developing economies. In the case of the latter, the rise in the number of SMEs has been crucial to economic diversification and resilience, particularly in countries vulnerable to commodity price fluctuations.
By creating employment opportunities for traditionally economically marginalised groups, such as women, migrants, youths and minorities, SMEs have also been credited with democratising the labour market and driving more inclusive economic growth. In recent years, SMEs have also been at the crest of innovation, taking advantage of their smaller size and agility relative to larger firms to respond more rapidly to technological or commercial opportunities in areas such as biotech and renewable energy.
However, SMEs still face numerous obstacles which often limit their scope for growth and undermine their long-term sustainability — from a disproportionately high tax burden, to skills gaps and credit and trade barriers. As such, SMEs are particularly susceptible to adverse market conditions. Governments around the world are seeking to address these structural issues by enacting regulatory changes, promoting knowledge sharing, and creating funding mechanisms to unlock the full growth potential of SMEs.
