PRESS BRIEFING ON SMALL AND MEDIUM-SIZED ENTERPRISES

Press Briefing

PRESS BRIEFING ON SMALL AND MEDIUM-SIZED ENTERPRISES

The United Nations Conference on Trade and Development (UNCTAD) launched a new handbook on how small and medium-sized enterprises could become major contributors to sustained growth and development, at a Headquarters press briefing this morning.

The study, "Handbook on Foreign Direct Investment by Small and Medium- sized Enterprises -- Lessons from Asia", reviews the economic structures and policies of seven Asian economies (Japan; Myanmar; Philippines; Republic of Korea; Singapore; Taiwan, province of China; and Viet Nam). It states that development in some countries had been pushed furthest by large enterprises. One result was that those economies had a "missing middle" in their business structures.

The Handbook was introduced by Susan Brandwayn, Economic Affairs Officer, New York Office of UNCTAD, and Henry Jackelen, Director of the Private Sector Development Programme of the United Nations Development Programme (UNDP).

Ms. Brandwayn said there was wide agreement that small and medium-sized enterprises were a very dynamic element for economic growth and development. In countries where data on those enterprises was available, mainly the developed countries, it had been shown that they were great contributors to employment, technology and adding value to production. The conditions in developing countries were not as clear, and the information was more scanty. The handbook addressed the issue and tried to gauge the potential for small and medium-sized enterprise development, so economic development in developing countries could improve. The handbook provided recommendations for policy makers in developing countries to promote the development of their small and medium-sized enterprises.

In the spirit of United Nations reform, in particular the Secretary- General's call for increased coordination and collaboration among the bodies and programmes, she said UNCTAD and the UNDP had signed a memorandum of understanding under which they would examine areas in which they could work together more intensely. Small and medium-sized enterprises was one of those areas.

Mr. Jackelen said he headed a unit that considered three basic areas: engagement with the private sector; promotion of enterprise and entrepreneurship; and micro-finance. The UNDP supported a global network of 130 country offices, which were working in over 170 countries on those three important issues.

The world was experiencing a radical transformation into a market economy, Mr. Jackelen continued, and the issues of globalization and "haves" and "have- nots" were becoming increasingly important for the United Nations. Entrepreneurship was a key, fundamental element in the process of integrating economies into the world market on terms that were equitable for all. Without

UNCTAD Briefing - 2 - 28 May 1998

entrepreneurship and private sector enterprises, all governments would agree, the chances for real economic growth were non-existent.

The UNCTAD had been supporting the development of small and medium-sized enterprises for many years, Mr. Jackelen said, with the involvement of the International Labour Organization (ILO), United Nations Industrial Development Organization (UNIDO), and other agencies. In the past, there had not been enough respect for the view of the private sector towards that issue. UNCTAD's approach in supporting small and medium-sized enterprises had often been to help build bureaucracies and governments that supported those enterprises. Creating an enabling environment and understanding the dynamics of private sector growth helped enterprise development and entrepreneurship.

Using Asia as its focus, Mr. Jackelen continued, the handbook advanced the concept that it was possible to encourage joint ventures between small enterprises in developed and developing countries, as well as between small enterprises in developing countries. In the age of globalization and the explosion of information, there should be a trend towards forging partnerships with existing private sector companies, both in developed and developing countries. The handbook attempted to chronicle that phenomena, which was one that had been extremely underutilized.

In the last five years, the UNDP had focused on the issues of poverty and the economic activities upon which the poor subsisted, he said. The Programme hoped that new approaches in small and medium-sized enterprises would attract the attention of the media to the successes that were occurring. That would help to encourage an entrepreneur in Tulsa, Oklahoma, consider working with an entrepreneur in Hanoi, Viet Nam. There were mechanisms that would allow enterprises in the countries of the Organisation for Economic Cooperation and Development (OECD) to engage with entrepreneurs in Africa in order to help spread the wealth. In that context, investing in entrepreneurships at the small and medium-sized levels would generate greater access to job and job markets at the bottom of the economic pyramid. Collaborations among entrepreneurs were also an incredibly effective mechanism for the transfer of technology.

There were no clear answers yet, but the UNDP was helping to build the platforms upon which solutions could work, Mr. Jackelen said. The handbook was a major step in addressing the issues of foreign direct investment and, by implication, technology, and partnerships.

Asked if the Handbook was also being released in Geneva, Mr. Jackelen said it was being released jointly in New York and Geneva.

UNCTAD Briefing - 3 - 28 May 1998

A correspondent asked if the Handbook's principles could be applied to the Russian Federation, as well as other former Soviet republics. Mr. Jackelen said those countries were perfect examples of places where partnerships could be forged. It was an area of the most skilled labour forces on the face of the earth, and it had a large market and advanced technology. Yet there was no entrepreneurship. It was important to find ways of building services that could be accessed by the entrepreneurs themselves. The entrepreneurship that existed in Asia could be the mechanism whereby technology could grow both inside Russia and outside. The governments in those countries should work to understand the phenomena of entrepreneurship and to find the instruments, services and mechanism that would facilitate its growth. In Latin America and Africa, there were many micro-enterprises and several large enterprises, but the small and medium-sized enterprises were missing. The former Soviet republics had the opportunity to build a middle from the beginning.

Ms. Brandwayn said the former Soviet Union had invested heavily in science and technology. In the developed countries, particularly the United States, new ideas and technologies often originated in small and medium-sized enterprises and not from large companies. The countries of the former Soviet republics had a large untapped resource of scientific and technical knowledge that did not exist in Asia or Latin America. Scientists and technologists could be married with marketeers. There was enormous potential in that area.

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