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SME Policy Index: Western Balkans and Turkey 2016

Assessing the Implementation of the Small Business Act for Europe

image of SME Policy Index: Western Balkans and Turkey 2016

The SME Policy Index is a benchmarking tool designed for emerging economies to assess SME policy frameworks and monitor progress in policy implementation over time. The Index has been developed by the OECD in partnership with the European Commission (EC), the European Bank for Reconstruction and Development (EBRD), and the European Training Foundation (ETF) in 2006 for the Western Balkans. The South East European Centre for Entrepreneurial Learning (SEECEL) joined as an additional partner in 2014. The SME Policy Index has since 2006 been applied in four regions and nine assessment rounds overall.

The SME Policy Index: Western Balkans and Turkey 2016 presents the results of the fourth assessment of the Small Business Act for Europe in the Western Balkans and, since 2012, Turkey. The assessment framework is structured around the ten principles of the Small Business Act for Europe (SBA). It provides a wide-range of pro-enterprise measures to guide the design and implementation of SME policies based on good practices promoted by the EU and the OECD.

The Index identifies strengths and weaknesses in policy design, implementation and monitoring. It allows for comparison across countries and measures convergence towards good practices and relevant policy standards. It aims to support governments in setting targets for SME policy development and to identify strategic priorities to further improve the business environment. It also helps to engage governments in policy dialogue and exchange good practices within the region and with OECD and EU members.

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Bankruptcy and second chance for SMEs (Dimension 2) in the Western Balkans and Turkey

Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance (Small Business Act Principle 2)

Realistically, policy makers understand that many SMEs will not succeed, and thus need bankruptcy laws to help them exit the market in an orderly fashion. These laws need to protect the rights of both creditors (repayment of loans, legal recourse due to firm failures) and debtors (maximising the preservation of assets, providing options to reorganise or liquidate an enterprise, and potentially restarting). Just as importantly, governments should promote a positive attitude towards second chances, encouraging honest entrepreneurs to start a new business after failure. Most economies in the Western Balkans and Turkey have established sound insolvency laws, with clearly defined procedures for distressed firms, with the exception of Kosovo which is drafting a new law. However, most economies still have procedural delays and lack some institutional support mechanisms such as early warning systems to identify distressed companies before they need to enter formal bankruptcy procedures. Discouragingly, not one economy has a programme in place to promote second chances after bankruptcy, thus exacerbating the stigma associated with failed entrepreneurs.

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