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OECD Secretary-General

Launch of the 2019 OECD SME and Entrepreneurship Outlook

 

Remarks by Angel Gurría

OECD Secretary-General

Paris, France - 20 May 2019

(As prepared for delivery)

 

 

Dear Ambassadors, Ladies and Gentlemen:


I am pleased to present the first OECD SME and Entrepreneurship Outlook. This new OECD flagship highlights the latest trends in SME performance and provides a comprehensive overview of business conditions and policy frameworks for SMEs and entrepreneurs. In line with the theme of this year’s OECD Forum, it also explores the implications of digitalisation and globalisation for market conditions and SME access to strategic resources such as finance, skills, technology, data and other innovation assets.

 

SMEs and entrepreneurs can help harness the opportunities of the digital transformation

Digitalisation is disrupting markets, business models and work practices, reshaping our economies, societies and lives. Many people are afraid of these disruptions, particularly given the challenging backdrop of subdued economic growth, widening geopolitical and trade tensions, entrenched inequalities, and rapid environmental degradation and climate change.


But – with the right policies – digitalisation can be a force for improved productivity, greater inclusiveness and higher well-being.


SMEs and entrepreneurs are powerful players in harnessing these opportunities. They account for 99% of all firms; generate over half of market GDP; serve as catalysts for innovation and productivity growth, particularly in strategic and technology-intensive sectors (including software, nano and bio-technologies); and shape the industrial fabric and identity of many regions and cities. 


Let me share some key results from the report.

 

The outlook for SMEs is improving

First, the good news. The SME engine is revving up! Firm creation, which has been driving job creation since 2010, is back to – or above – pre crisis levels in many countries, including Japan and the US. In the UK and France, firm creation has doubled over the last two decades. SMEs are also benefiting from favourable credit conditions, which are accommodative by historical standards, and from growth in alternative sources of funding – including asset-based finance, equity funding and online alternative financing.


But many challenges remain

However, there are some troubling trends. Global value chains (GVCs), a major channel for SMEs to access foreign technology and knowledge, scale up activities and increase productivity and wages, have lost momentum. FDI is at its lowest level since 2013. Trade tensions may further hamper SME opportunities to engage in global markets. In the event of a new economic slowdown, SMEs are likely to be hit hard.


These gathering clouds may entrench existing gaps in productivity and pay. Despite the recovery in firm creation, new SME jobs are often in low-productivity sectors. And SMEs continue to pay wages around 20% lower than large firms. This has contributed to overall wage stagnation and may have exacerbated inequalities. Between 2010 and 2016, close to 90% of net new jobs in France, 75% in the United States, and 66% in Germany and the United Kingdom, were in low-wage sectors.

 

Higher innovation and technology upgrading can help SMEs improve productivity and wage performance

The digital revolution is opening up new opportunities for SMEs, with huge implications for productivity and inclusive growth. But SMEs continue to lag in the use of advanced digital technologies, such as cloud computing and data analytics. In most countries, less than 25% of SMEs provide ICT training. This is shocking! In addition, SMEs and entrepreneurs struggle disproportionately to navigate increasing complexity in technologies and markets, manage regulatory and administrative burdens, and access the strategic resources they need to compete in a globalised world. In 2017, one quarter of SMEs in the EU reported a lack of skilled staff or experienced managers as their most important problem. This figure has doubled since 2012. There are also signs that SMEs may have trouble accessing markets that are becoming more concentrated, and with less competition, as a result of the digital transformation.

 

We need innovative and multi-level policy solutions for SMEs

In response to these challenges, governments are placing growing attention on SMEs and SME-related policies, to level the playing field.


However, the SME policy space is complex. It often cuts across boundaries of different ministries and levels of government. Policies can unintentionally overlap or pull in different directions. Delivering effective SME policies requires a cross-cutting perspective, breaking down silos, and managing trade-offs, synergies and complementarities, across all levels of government.


SMEs are also heterogeneous. Many innovation champions co-exist with low-productivity and low-wage firms. Differences exist in terms of size, age, location, business models, as well as in entrepreneurs’ background and aspirations. This diversity has important implications for policymaking.


We thus need a deeper understanding of the conditions and actors that enable SMEs to thrive and a renewed policy and measurement agenda. We need more and better data, and stronger evidence on SME policies. And we need to reframe the SME policy debate in light of today’s major challenges.


This new publication is an important step in that direction. It provides a forward-looking perspective on the challenges and opportunities SMEs face, and the policies that can help them unleash their potential.


The report also offers a set of benchmarking tools and insights on the large variety of approaches governments are adopting to foster entrepreneurship and SMEs. It includes 36 country profiles that provide an overview of SME trends, business conditions and recent policy developments, which I invite you to read.

 

Ladies and Gentlemen:


Our new SME and Entrepreneurship Outlook will facilitate more coherent SME and entrepreneurship policies. We hope that it will position governments in countries, regions and cities, to design, develop and deliver better policies for stronger SMEs and more resilient, sustainable and inclusive societies.

Thank you!

 

 

See also:

OECD Work on SMEs and Entrepreneurship

 

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