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Latin America and the Caribbean 2019

Policies for Competitive SMEs in the Pacific Alliance and Participating South American countries

image of Latin America and the Caribbean 2019

The SME Policy Index is a benchmarking tool that assists emerging economies in monitoring and evaluating progress in policies that support small and medium-sized enterprises. This first application of the Index methodology in the Latin American and Caribbean region covers the four Pacific Alliance member countries (Chile, Colombia, Mexico, Peru) and three participating South American countries (Argentina, Ecuador, Uruguay). Divided into seven policy dimensions, this report assesses the strengths and weaknesses that exist in different areas of SME policy design, implementation, and monitoring and evaluation, and provides guidance to policy makers in identifying policy areas for future reform according to international good practices. This report is a joint effort between the Development Bank of Latin America (CAF) and the OECD through its Latin America and the Caribbean Regional Programme (LACRP), in co-operation with the Latin American and Caribbean Economic System (SELA) and the “Foundation for the Strategic Analysis and Development of the SME” (FAEDPYME).

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Institutional framework (Dimension 1)

This chapter assesses the level of development of the LA7 countries in relation to the main building blocks of SME policy, notably the policy scope, as determined by the country’s SME definition; the policy objectives and strategic orientation; the assignment of the SME policy mandate; the design and governance of the main policy institutions; the mechanisms of policy consultation and co-ordination; and the actions taken to reduce enterprise informality. The assessment results show that the LA7 countries have accumulated significant experience in private sector development and SME policy and established highly articulated institutional frameworks. However, the LA7 countries still face major challenges in terms of further integrating SME policy into their wider country strategies for economic and social development, making co-ordination and consultation mechanisms more effective, improving monitoring and evaluation mechanisms, and securing a consistency between overall policy targets and the tools and budgets at the disposal of the institutions in charge of policy implementation. The presence of a large informal sector in most of the LA7 countries is a further challenge to policy making, as it undermines the governments’ ability to conduct inclusive SME policies and to reach the most vulnerable segments of the SME population.

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