Small firms can boost relations between Caribbean, Europe

A new study says micro, small and medium-sized enterprises (MSMEs) can play a "fresh and significant role" in boosting relations between Latin America, the Caribbean and the European Union (EU).

The study, 'Building SME Competitiveness in the European Union and Latin America and the Caribbean: Policy Proposals by the Private Sector', was discussed during the weekend summit of the heads of state and governments of the Community of Latin American and Caribbean States (CELAC) and the EU.

According to the study, the new role is possible "given their substantial share in the economic activity of both regions' countries".

It was presented by Alicia Bárcena, executive secretary of ECLAC, and Arnaldo Abruzzini, secretary general of European Association of Chambers of Commerce and Industry.

"There needs to be more coordination between public policies and private-sector actions to break the vicious circle that limits SME performance," Bárcena said.

"As part of deepening CELAC-EU relations, we call on SMEs to be strategic players in the inclusive development of both regions' countries," she added.

Abruzzini said there would be no growth and job creation in Europe or the region without small companies.

"Thus, increasing their competitiveness by ensuring their successful internationalisation is a key challenge ahead of us," he said, adding that it would also be an opportunity for both regions to "define concrete instruments that will foster the strategic partnership".

Abruzzini said an "effective" network of business support organisations in the region is "crucial to achieve these objectives".

According to ECLAC, the study brought together the visions of almost 50 Latin American, Caribbean and European business leaders and opinion makers interviewed in December 2012, and was aimed at encouraging debate among senior political and business authorities about the role of SMEs in domestic economies and the support they need to overcome their main limitation: the productivity gap with large companies.

ECLAC said SMEs in the EU, Latin America and the Caribbean "are thought to represent almost 99 per cent of all firms and employ 67 per cent of all workers".

In addition, ECLAC said they also have lower productivity and make a smaller contribution to Gross Domestic Product (GDP) than larger companies, and have a limited share of exports.

Four interlinked areas

According to the study, both regions' business owners identify four interlinked areas in which support policies are needed to narrow the productivity gap between SMEs and large companies.

These are: innovation to strengthen productive and management capacity, access to markets, productive linkages and business cooperation and access to financing.

At the same time, the study notes that business owners describe the obstacles to the internationalisation of SMEs as including the lack of information on markets and business opportunities, scant vertical integration (in value chains) and horizontal integration (cooperation and peer associations), lack of human resources needed to manage such processes and funding problems.

"It is important for public and private agencies to pursue joint and coordinated actions that will ensure continuity over time and will incorporate the local, regional and territorial dimensions," the study found.

It noted business leaders agree on the need to implement priority actions to promote cooperation among companies from the two regions in fields such as renewable energy, clean technology and biotechnology, particularly in the light of new world economic trends and the productive and technological specialisation of Latin America and the Caribbean and the EU.

The report also indicates the need to make progress in producing standardised and comparable quantitative information on the characteristics and performance of SMEs in Latin America and the Caribbean, as well as to improve the visibility and dissemination of actions, programmes and policies to support these firms.

This could involve, for instance, creating an observatory of good practices, the study added.

- CMC