Latin America and the Caribbean 2019

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

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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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Ecuador currently seeks to implement SME policy both as an instrument to achieve productive transformation and as a tool for social promotion. While this approach has a rationale rooted in the country’s particular development challenges, in practice, effectively managing these two separate objectives is a challenging task. In order to effectively advance these dual priorities, Ecuador should consider the development of an integrated SME strategy and redesign its policy implementation framework accordingly to improve the targeting of policy actions and devote substantially more resources to SME development. Actions oriented to business development services (BDS) and the promotion of innovation and technology are particularly lacking, with even existing initiatives threatened by ongoing budget cuts in place since 2016. Furthermore, while a government-wide monitoring and evaluation system does exist, current strategies lack specific, performance-oriented key performance indicators (KPIs) and most programmatic information remains internal to the government, leading to information gaps concerning the public support already readily available.

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