Manufacturing is a cornerstone of global economic value creation, both through its direct contributions to output and employment and through its role in driving technological diffusion and productivity spillovers across sectors. Small and medium-sized enterprises (SMEs) play a key role in industrial ecosystems, generating a substantial share of manufacturing value added and employment across OECD economies. Yet the sector is undergoing rapid transformation. Digitalisation, rising sustainability requirements, and growing supply chain vulnerabilities are reshaping the competitive landscape at an unprecedented pace, presenting SMEs with both new opportunities and significant adjustment challenges.
This report examines these dynamics in three key manufacturing sectors: automotive, electronics (semiconductor) and machinery, where SMEs play an important role but face distinct transformation pathways. It highlights emerging policy approaches to better integrate SMEs into new industrial strategies, including ecosystem-based policy approaches that strengthen collaboration across local and global supply chains, place-based initiatives that support skills development and technology diffusion, and simplified access to industrial programmes to ensure SMEs can participate fully in innovation and transition efforts.
