SMEs depend on a supportive business environment to start, operate and grow, making sound policies, fair competition, access to finance and effective support services essential to their development. This cluster examines whether the policy, regulatory and institutional environment enables SMEs to start, operate, grow and exit the market under clear, predictable and proportionate conditions. It assesses how effectively SME considerations are embedded in policy design, as well as whether SMEs operate on a level playing field, including efforts to reduce informality, protect competition, ensure fair access to public procurement, and provide timely access to justice.
SME Policy Index for Western Balkans and Türkiye 2026
Regional Profile
Abstract
Small and medium-sized enterprises (SMEs) constitute the backbone of most economies, representing more than 90% of businesses and around 70% of employment globally. Their capacity to raise productivity, compete effectively, innovate and navigate the green and digital transitions is therefore closely intertwined with overall economic performance. At the same time, SMEs typically face higher regulatory, administrative and financing constraints than larger firms, reflecting more limited resources and compliance capacity. Addressing these structural asymmetries requires policy and institutional frameworks that are predictable, proportionate, and responsive to firm size and capabilities. In this context, promoting an SME-friendly policy and institutional design is less about creating standalone “SME-only” programmes and more about systematically embedding an “SME lens” across the policy cycle.
In the Western Balkans and Türkiye (WBT), strengthening SME-friendly policy and institutional design is particularly important given the even greater structural weight of SMEs, which constitute around 99.8% of active firms and generate around 73% of employment.1 However, SME density in WBT economies remains steadily below EU and OECD averages,2 pointing to persistent structural barriers to firm entry, formalisation and scale-up that contribute to a thinner and less dynamic business base. Against the backdrop of ongoing structural reforms aimed at accelerating convergence with the EU economies, embedding a systematic SME lens across regulatory governance, public administration reform and competitiveness strategies can help reduce informality, foster business dynamism and enhance SMEs’ integration into regional and global value chains, while supporting progress in the green and digital transitions.
In line with OECD principles on regulatory quality, better regulation and SME policy, this section examines the extent to which governance frameworks and regulatory practices foster an enabling environment for SMEs through proportionate, transparent and evidence-based policymaking (OECD, 2022[1]). It reviews the effectiveness of whole-of-government co-ordination and streamlined procedures in limiting unnecessary compliance costs and supporting market entry and exit, while assessing the extent to which policymaking and institutional arrangements processes are transparent, accountable and grounded in robust data.
1.1.1. Reinforcing regulatory, institutional and policy frameworks for SME lifecycle support
Robust regulatory, institutional and policy frameworks are central to supporting SMEs throughout their lifecycle, from entry and early growth to scaling, market consolidation and, where relevant, exit. Moreover, firms in the region perceive the general business environment as one of the most prominent factors for their intra-regional trade relations (Regional Cooperation Council (RCC), 2025[2]). In line with OECD principles, frameworks and practices (OECD, 2022[1]; 2023[3]; 2025[4]), this requires coherent governance arrangements, clear regulatory frameworks and well-coordinated support tools to ensure the delivery of predictable, proportionate and accessible policies that respond to SMEs’ evolving needs.
While SME policy agendas expand in line with wider economic reform priorities, persisting fragmentation and overlaps across strategies dilute accountability and complicate delivery
WBT economies continue to adopt differing approaches to the design and governance of SME policy frameworks, both from a strategic and institutional perspective. During this assessment cycle, most jurisdictions have undertaken efforts to update or expand their SME policy frameworks. At the same time, Albania and Bosnia and Herzegovina (the entity of Republika Srpska) continue to operate under strategies already assessed in the previous edition. Across the region, governments articulate their SME policy vision through dedicated strategies operated by specialised agencies or ministries responsible for enterprise development, with Bosnia and Herzegovina (the entity of the Federation of Bosnia and Herzegovina) moving to this model relatively recently, adopting its first dedicated SME development strategy in 2022. By contrast, Albania and Kosovo* frame SME priorities within economy-wide private-sector development strategies, while in Türkiye they are embedded within the national development planning framework, with operational priorities subsequently elaborated by the Small and Medium Enterprises Development Organization of Türkiye (KOSGEB).
SME policy strategies across the Western Balkans frequently set out broad reform agendas aligned with EU accession priorities, the green and digital transitions, and competitiveness objectives. While this alignment helps anchor reforms within regional integration processes, it often yields policy packages spanning multiple sectors and institutions. In practice, implementation responsibilities are typically distributed across a wide range of ministries, agencies and development funds, increasing co-ordination demands and diluting accountability for delivery. At the same time, many strategies anticipate substantial financing from EU instruments and international partners, reflecting constraints imposed by limited domestic fiscal space and further complicate planning and sequencing of reforms. In addition, SME-relevant objectives are often distributed across several complementary policy documents (e.g., industrial strategies, smart specialisation strategies, innovation plans and digitalisation agendas), creating overlaps and making it difficult to prioritise a number of costed and monitorable interventions. As a result, policy commitments become dispersed across numerous initiatives and institutions, weakening strategic focus and complicating co-ordination, budgeting and performance monitoring. Equally, persistent data collection and interoperability gaps further constrain the ability of policymakers to build a comprehensive and comparable evidence base for SME policy design and monitoring (see Introduction on “SME data coverage”).
Efforts to strengthen the institutional basis for SME support are advancing across economies, but co-ordination across government and predictable funding horizons remain key challenges
When policy frameworks encompass a wide range of measures implemented across multiple institutions, effective delivery depends on co-ordination mechanisms and clearly defined institutional responsibilities. In line with OECD principles on whole-of-government policy implementation, most WBT economies rely on dedicated agencies or bodies to lead the implementation of SME support programmes and co-ordinate related policy initiatives, albeit with differing degrees of institutional focus and delivery capacity (Figure 1.1). These agencies typically operate alongside line ministries and play a central role in translating strategic objectives into operational programmes, facilitating interaction with the private sector and managing support instruments targeting SMEs. Across the region, institutional arrangements continue to evolve, and responsibilities are periodically reorganised to improve efficiency and reduce fragmentation. Recently, North Macedonia has consolidated existing support institutions by creating the new Agency for Innovation, Scientific and Technological Development and Entrepreneurship (INOVA), which merged previously separate entities responsible for entrepreneurship and innovation support. At the same time, new institutions have emerged to address theme- or segment-specific dimensions of private-sector development, such as Start-Up Albania or the Innovation Fund in Montenegro, which complement specialised SME support structures.
The effectiveness of these arrangements depends not only on institutional design but also on the adequacy and predictability of financial and human resources. During this assessment period, some economies, notably Albania, Kosovo and Türkiye, have increased the budgets of leading SME institutions, with Bosnia and Herzegovina also expanding line ministerial resources across entities. While these increases partly reflect inflationary adjustments, in some cases, they also represent a real expansion. Nevertheless, many institutions still face capacity constraints in fulfilling their policy leadership and co-ordination roles, particularly in areas such as analytical support, programme monitoring and inter-institutional co-ordination. Moreover, financing for SME support measures often remains organised on an annual basis and closely linked to project-based funding, with weak alignment with SME strategy and action plan cycles constraining predictable planning and reinforcing reliance on short-term, grant-driven interventions. In this regard, Türkiye’s KOSGEB offers a regional benchmark through its multi-year strategic plans.
Efforts to reduce regulatory and administrative burdens remain uneven across economies, while existing tools are not consistently used to prevent new administrative burdens for SMEs
Despite moderate progress over the assessment cycle, regulatory and administrative burdens continue to be perceived as a significant obstacle to doing business by firms across WBT economies (Regional Cooperation Council (RCC), 2025[2]). While several economies have introduced initiatives to reduce regulatory and administrative complexity, comprehensive and sustained reform strategies remain limited and often strongly reliant on donor-driven initiatives. Most economies currently lack multi-year agendas for systematically simplifying business-related legislation. Serbia and Kosovo are among the few economies implementing more structured programmes to review and reduce regulatory and administrative burdens.3 In Bosnia and Herzegovina, similar efforts are limited to Republika Srpska, which has initiated a process to catalogue and rationalise business formalities. By contrast, Montenegro and North Macedonia, after discontinuing earlier regulatory reform frameworks, have recently focussed on mapping fiscal and para-fiscal charges affecting SMEs as a preliminary step toward their potential rationalisation.
Efforts to reduce compliance costs and improve regulatory efficiency increasingly focus on simplifying administrative procedures and digitalising interactions between firms and public authorities, consistent with OECD principles on streamlined, user-centred regulatory delivery. Most economies have expanded central e-government platforms and one-stop-shop arrangements to consolidate business services and reduce procedural fragmentation. Albania, Serbia and Türkiye have made the greatest progress in integrating a broad range of administrative services into central digital portals, while Kosovo and North Macedonia operate comparatively advanced digital systems for business registration, although their effectiveness still depends on enabling infrastructure and user uptake. Beyond business entry, however, procedural simplification remains more limited, particularly in licensing, permitting and tax administration. In these areas, decentralised responsibilities, limited interoperability and weak mutual recognition continue to generate overlapping requirements and reliance on paper-based or in-person interactions, constraining the full deployment of digital services.
Simplification efforts across the region leave limited room for the preventive dimension of administrative and regulatory burden mitigation, with most initiatives focussing on reducing existing requirements rather than preventing the creation of new ones. Kosovo stands out as the main exception, as its burden reduction programme explicitly includes measures to prevent new administrative costs. In practice, this function is largely expected to be delivered through regulatory impact assessments (RIAs), whose frameworks have been strengthened in recent years across several economies, including Albania, Bosnia and Herzegovina, Serbia and Türkiye. To better capture the impact of regulation on SMEs in line with the EU practice, Serbia has introduced an SME Test, while Kosovo and North Macedonia plan to adopt it soon. Yet, although most economies have oversight bodies to review the quality of RIAs, recently including Türkiye, these often operate through compliance-oriented, informal feedback, limiting their ability to enforce quality standards effectively. Montenegro continues to stand out in this regard, as it evaluates RIAs against defined quality requirements and categorises them accordingly. The overall effectiveness of RIAs across the region is further constrained by its late application in the policy cycle, often after draft legislation has been prepared, with only Kosovo standing out for the use of early-stage concept documents.
1.1.2. Securing systematic, comprehensive and transparent dialogue between policymakers and SMEs
Systematic, comprehensive and transparent public-private consultations (PPCs) are a key pillar of an SME-responsive regulatory framework. Early-stage engagement enables policymakers to draw on first-hand business experience, identify root causes and assess practical implications before draft rules are formulated, allowing stakeholders to influence the direction of policy when meaningful alternatives remain open. When embedded consistently throughout the policy cycle, PPCs enhance the quality, legitimacy and predictability of SME-relevant regulation, while fostering trust and shared ownership between public authorities and the private sector.
Although formally established, consultation processes remain largely compliance-driven, with limited quality assurance and weak systematic monitoring or policy impact evaluation
Across the region, legal frameworks for PPCs are formally established and broadly aligned with EU and OECD principles and procedural requirements (Table 1.1), with the exception of Türkiye, where this occurs only through administrative practice and, more recently, as part of RIAs. In practice, however, consultations tend to be often conducted only for draft legislation perceived to carry particular political or public interest, with the extensive use of exemptions and accelerated legislative procedures further limiting the proportion of draft acts subject to consultation. As a consequence, even in economies where formal compliance rates appear comparatively high, such as Albania and Montenegro,4 consultations apply to only a limited share of total legislative output.
Notes:
1. In Serbia, a broad basis for consultation exists for important by-laws (Law on State Administration), although it is not mandatory under the Government Rules of Procedure. The requirement is therefore considered met, albeit conditionally.
2. A central e-consultation portal exists at the state level, where the overall share of published drafts remains limited. A portal has also recently been established in Republika Srpska, although its practical implementation and consistency of use will require further evaluation.
3. The portal exists; however, persistent accessibility issues appear to limit its effective functioning.
Source: Information provided by government authorities as part of the assessment process.
Where PPCs do take place, their implementation remains largely uneven across line ministries and policy domains, and outreach is often confined to established institutional stakeholders. In addition, consultations are commonly organised late in the policy cycle, frequently after impact assessments have already been completed, thereby constraining stakeholders’ ability to influence problem definition, policy design, or the selection of regulatory options. North Macedonia is a partial exception in this regard, as its frameworks envisage consultations earlier in the process so that their outputs can directly inform the evidence base underpinning the RIA. Although, in principle, this sequencing can strengthen both the legitimacy of regulatory proposals and the substantive influence of stakeholders, its effectiveness and quality depend on the clarity with which policy problems are defined at the outset.
Since the previous assessment, most economies have made limited efforts to strengthen monitoring of PPCs, with oversight arrangements continuing to focus primarily on procedural co-ordination rather than on the quality and consistency of implementation. Where bodies formally responsible for PPCs exist, they typically play a facilitative role, ensuring that draft acts are circulated for consultation and that procedural steps are followed. In some economies, instead, the system still relies purely on self-compliance by line ministries, with no central enforcement mechanisms. Only Albania and Kosovo have established central monitoring bodies that effectively consolidate data and produce annual reports on consultation activity and formal compliance. In other economies, reporting is fragmented and generally limited to summaries of individual consultations prepared by responsible line ministries. Even in systems with more developed monitoring frameworks, they rarely assess whether stakeholder feedback meaningfully influences final policy decisions, and stakeholder engagement is not mapped by category, making it impossible to determine the extent of SME participation.
Despite improved accessibility through electronic consultation means, stakeholder engagement remains inconsistent and weakly integrated into decision making across economies
During the current assessment cycle, governments across the region have sustained efforts to promote the use of digital tools for public consultations, although their uptake is not yet universal (Table 1.1). In Albania, Bosnia and Herzegovina (at the state level and in Republika Srpska), Kosovo, and Serbia, centralised online portals continue to support the circulation of draft legislation, thereby contributing to greater procedural transparency and making consultation opportunities more accessible to stakeholders. However, despite established e-consultation practices, stakeholder engagement through these tools remains critically low across the region, showing modest participation rates and underutilised feedback channels. Under such conditions, PPCs risk being perceived as procedural formalities, potentially slowing legislative processes without substantively enhancing regulatory quality.
In recent years, international practice has responded to similar challenges by expanding the use of more interactive consultation formats. Since 2017, the number of OECD Member countries and EU state jurisdictions employing virtual public meetings has doubled and now exceeds those using online platforms, marking one of the most visible procedural developments in consultation practice towards more participatory forms of engagement (OECD, 2025[5]; 2025[4]). Yet, this trend has been far less pronounced in the WBT region, where the use of virtual public meetings as a consultation tool remains limited in most economies, suggesting scope for further diversification beyond predominantly written and platform-based approaches. In parallel, several economies maintain additional channels for engaging the business community outside the formal consultation process, either through institutionalised dialogue platforms or advisory bodies. Examples include the Platform for Public-Private Dialogue in North Macedonia and Kosovo’s recently established National Council for Economy and Investments. However, while these mechanisms provide structured opportunities for information exchange and discussion, their influence on policy formulation and decision making processes remains limited.
The way forward
Continue consolidating SME policy architectures to ensure better coherence, governance and delivery capacity. Where multiple strategies are already in place, the emphasis should be on better harmonising and rationalising them, and consolidating SME-relevant measures across thematic areas (e.g. innovation, industrial policy, digitalisation, skills, etc.) into a coherent, appropriately prioritised framework. At the governance level, reinforcing lead institutions for SME policy co-ordination remains critical, particularly in contexts where responsibilities are currently dispersed across ministries and agencies. This should be accompanied by more structured inter-institutional co-ordination mechanisms and clearer delineation of remits to minimise overlaps and gaps in delivery5. These efforts should be further underpinned by more predictable and adequate resources, aligning budget allocations and staffing capacities with strategic priorities, as well as reducing reliance on ad hoc or short-term funding instruments.
Expand and systematise evaluation practices across the SME policy cycle to enhance the effectiveness of support measures and the adaptability of policy frameworks. The use of comprehensive ex post evaluations to inform successive SME strategies, already established in some economies in the region, marks a clear commitment to more evidence-based, iterative policymaking and should be generalised. However, reliance on end-of-cycle assessments alone risks limiting the responsiveness of policy frameworks, as it constrains governments' ability to address design or implementation shortcomings while measures remain in effect. Embedding more systematic impact evaluation across the entire policy cycle would enable more timely, targeted adjustments to policy instruments.
Ensure regulatory impact assessments are conducted in a timely and substantive manner to inform policy decisions, including implications for SMEs. To fulfil their function as a tool for evidence-based policymaking, RIAs should be initiated at an early stage of the policy cycle, during the initial conceptualisation of regulatory proposals, and updated iteratively as policy options are refined, in line with the OECD Best Practice Principles on RIA (OECD, 2020[6]) (Box 1.1). Monitoring mechanisms could also be strengthened to improve overall quality and effectiveness, including by tracking the performance of RIAs and reporting more comprehensively and analytically on the quality of assessments to support policy learning. In addition, governments are encouraged to consider systematically including the assessment of regulatory impacts on SMEs, in line with the SME Test methodology, building on existing practices such as those recently incorporated into the Serbian framework.
Assess and recalibrate the tax burden on SMEs to reduce barriers to formalisation and business growth. Governments are encouraged to undertake a targeted review of the tax regime for unincorporated SMEs, examining the combined effects of income taxation, social security contributions and indirect taxes on incentives for formalisation, investment and firm expansion, while ensuring that such efforts do not place firms that have remained compliant at a competitive disadvantage. In parallel, simplified tax regimes should be reviewed to identify thresholds, cliff effects or design features that may discourage firms from scaling up or transitioning to the standard tax regime, with a view to reducing unnecessary barriers to growth. Where relevant, adjustments to thresholds, phase-out mechanisms or compliance requirements could help reduce disincentives to growth.
Strengthen the governance of public consultations to improve the quality, inclusiveness and policy impact of stakeholder engagement.
For economies with more established public-private consultation systems that are single-entry and easily accessible (Albania, Bosnia and Herzegovina [Republika Srpska], Kosovo, Montenegro, North Macedonia and Serbia): The focus should be on improving stakeholder engagement and strengthening performance monitoring of the consultation process. Oversight mechanisms should be enhanced to assess the substantive quality and impact of consultations, including by monitoring the diversity, representativeness, and responsiveness of stakeholder participation, as well as the extent to which consultation feedback informs final policy decisions. In parallel, authorities could explore the scope for diversifying consultation modalities to complement existing portal-based mechanisms. Hybrid approaches, such as structured virtual meetings, can retain the accessibility and transparency benefits of digital platforms while fostering more meaningful interaction with stakeholders.
For economies where public consultations remain inconsistently applied and less accessible (Bosnia and Herzegovina [Federation of Bosnia and Herzegovina] and Türkiye): Governments are encouraged to prioritise the creation of more coherent arrangements for the management and oversight of consultation processes. This includes consolidating consultation procedures through a dedicated platform and assigning clear institutional responsibility for oversight, guidance and monitoring, with a view to ensuring more consistent application, improved accessibility for stakeholders and greater transparency across the policymaking process.
Develop stronger SME data systems to support evidence-based policymaking. Governments are encouraged to prioritise improving the availability, consistency and analytical use of SME-relevant data across public institutions in order to strengthen the monitoring and evaluation of SME policies, enable more timely policy adjustments and reduce reliance on ad hoc analytical exercises. This may involve improving the integration of administrative and statistical datasets, establishing clear protocols to facilitate data sharing among ministries, implementing agencies and national statistical offices, and expanding the collection of SME-specific indicators where gaps remain.
Through the Rules for Good Legislative Practice and Legislative Drafting, Estonia has embedded RIA directly into its legislative process. A key feature is the requirement for ministries to prepare, before drafting a legislative proposal, a “legislative intent” document (väljatöötamiskavatsus), which must justify the need for legislation, outline the policy problem, identify possible policy options, and explain the preferred option’s compatibility with the existing legal system. Furthermore, by requiring identification of the significant impacts expected from the proposed intervention and a plan to analyse them, the system helps ensure the timely use of impact assessments to inform policy design. Once a draft law is prepared, it must undergo a formal impact assessment in line with the government’s RIA methodology, and the framework also provides for ex post impact assessment after implementation. Oversight is exercised by the Ministry of Justice’s Legislative Quality Division, which reviews RIAs and can return them to the proposing ministry for revision if standards are not met.
Policy relevance for the Western Balkans and Türkiye
Estonia’s framework illustrates one possible approach to integrating early-stage policy analysis and central quality oversight into the legislative process without requiring extensive institutional restructuring or placing disproportionate analytical demands on line ministries. Drawing inspiration from similar arrangements, WBT economies could help ensure that RIAs function more effectively as a tool for evidence-based policymaking by informing regulatory proposals from the early stages of policy development.
Source: Government of Estonia (2011[7]).
SMEs thrive in a business environment that supports them throughout their life cycle and ensures a level playing field, where firms operate under the same market conditions. SMEs are particularly vulnerable to factors that undermine this balance, including unfair market practices, informal competition, state-induced distortions (such as preferential treatment of state-owned enterprises [SOEs]) or the misallocation of public resources through non-competitive public procurement, and limited access to justice. When these dynamics become widespread, they can weaken competitive conditions and reinforce incentives for firms to operate outside formal rules.
In the WBT economies, SMEs continue to face barriers in the form of high levels of informality, limited competition in key sectors, and constrained access to timely justice. Informality remains widespread across parts of the region, with the informal economy6 representing a major constraint to the region’s competitiveness, and market conditions in key sectors remaining uneven. Despite public procurement accounting for a substantial 10% of gross domestic product (GDP) in the region, business environments in several economies continue to exhibit limited effective competition. The continued presence of inefficient SOEs in strategic sectors, combined with public financial support mechanisms for these enterprises, underscores the need to ensure that such support is provided in a manner consistent with competitive neutrality. In parallel, delays in judicial proceedings and limited use of alternative dispute resolution (ADR) mechanisms region-wide continue to affect SMEs’ ability to enforce contracts and resolve commercial disputes in a timely and proportionate manner.
This section reviews how current policy frameworks affect SMEs’ ability to compete on equal terms across the WBT region. It analyses measures aimed at reducing informality, strengthening competition in key markets, including public procurement and SOEs, and improving access to judicial and ADR mechanisms.
1.2.1. Tackling informality for a more competitive business environment
Tackling informality is essential to levelling the playing field for SMEs, as undeclared activity can create unfair cost advantages and distort competition, with disproportionate effects on compliant SMEs. Where business environment conditions make compliance burdensome or enforcement uneven, firms operating outside formal rules can undercut compliant competitors, weakening incentives for formalisation and efficient resource allocation. As informality spreads, compliance risks becoming a disadvantage rather than a norm, further weakening trust in regulatory systems. Addressing the informal economy, therefore, requires a balanced policy approach that combines consistent enforcement with proportionate tax regimes, simplified administrative procedures and credible incentives to formalise.
Dedicated anti-informality strategies have been widely adopted across the region, but design elements that address the specific constraints faced by micro and small firms – such as simplified compliance pathways or targeted formalisation incentives – remain limited
Informality remains a major structural constraint on SME competitiveness across the region, both through its macroeconomic effects and its labour-market dimension. Recent data point to persistently high levels of informality across economies, with the informal economy accounting for approximately 28% of GDP and informal employment averaging 20% of total employment7 (Figure 1.1). While the balance between the two varies across economies, the regional picture points to significant levels of informality, with implications for competition, productivity and resource allocation, including continued exposure of compliant firms to unfair competition. Informality is also perceived by businesses in the Western Balkans themselves as one of the top three impediments to growth (RCC, 2026[8]).
Against this backdrop, most economies in the WBT region have adopted dedicated strategies or action plans to reduce informality, signalling sustained recognition of its importance as an economic barrier. This is the case in Montenegro, North Macedonia, Serbia and Türkiye, whereas Albania and Bosnia and Herzegovina tackle informality through dispersed measures rather than under a dedicated unified strategy. However, dedicated frameworks are designed at the economy-wide level and rarely include explicit SME-differentiated design features. While micro and small firms are consistently identified as both highly exposed and more prone to adopt informal practices, few strategies tailor policy responses according to firm size, compliance capacity or sectoral concentration. As a result, formalisation measures often apply uniformly across the business population, without sufficiently accounting for the administrative and financial constraints faced by smaller enterprises.
Notes: Estimates of the informal economy as a share of GDP are inherently approximate and may vary by several percentage points depending on methodology; they should therefore be interpreted as indicative rather than exact values. Informal employment data refer to 2024 for all economies except Montenegro and Türkiye, where the latest available data correspond to 2023.
Sources: ILO (2026[9]); OECD (2025[10]); World Bank (2024[11]).
Furthermore, existing informality programmes in Montenegro, North Macedonia, and Serbia lack annual monitoring frameworks, while in Türkiye, a lack of well-defined performance indicators similarly limits assessment of implementation and SME outcomes. Without more differentiated features and proper evaluation, formalisation efforts may produce only partial results, limiting their effectiveness in restoring competitive neutrality and incentivising SME formalisation.
Formalisation efforts have centred on modernising business entry, labour registration and fiscal monitoring frameworks, using digital tools and simplified procedures aimed at reducing undeclared activity
Efforts to reduce informality across the region continue to differ significantly in scope and depth, with economies adopting various combinations of entry-point simplification, labour-market measures and fiscal oversight tools. The selected measures highlighted in Table 1.2 are commonly used across the region.
While digital business registration primarily facilitates firm entry, it can also indirectly support formalisation by lowering administrative costs and barriers to registration. By reducing the time and cost required to start a business and enabling entrepreneurs to submit applications and obtain registration documents online, digital systems can simplify the transition from informal to formal activity. A number of economies, including Albania, Kosovo, North Macedonia, Serbia and Türkiye, have introduced fully digital business registration systems, helping make formal market entry more accessible for new firms. In Bosnia and Herzegovina, registration procedures differ across jurisdictions and remain only partially digitalised, while Montenegro is progressing towards a fully digitalised registration system, expected to become operational in 2026.
Notes: The table provides an overview of selected measures and tools and does not constitute a comprehensive inventory of anti-informality policies. It primarily covers complementary and compliance-easing measures, and does not include enforcement actions such as inspections, controls, or sanctions.
1. In Montenegro, business registration is not yet fully digitalised. While the eFirma portal is in place, a significant share of registration procedures still relies on in-person or paper-based steps. The 2025 Law on Registration of Business and Other Entities mandates the transition to fully digital registration from 2026.
Complementary measures aimed at reducing informality beyond the point of entry also show considerable variation. With the exception of North Macedonia and Serbia, which have introduced simplified mechanisms for registering seasonal or freelance workers, labour-market formalisation across the region still relies largely on inspections and enforcement rather than on dedicated channels that ease compliance for SMEs.
On the other hand, most economies have expanded or upgraded their fiscalisation systems, with Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Serbia, and Türkiye introducing measures such as e-invoicing requirements, strengthened point-of-sale controls, or targeted traceability tools, thereby increasing authorities’ enforcement capacity. In North Macedonia, despite planned improvements under the 2025 Fiscal Strategy, no clear implementation has been recorded to date. Variation across economies is also evident in the use of simplified tax regimes for microenterprises, which are in place in Bosnia and Herzegovina’s entity of Republika Srpska, North Macedonia, Serbia, and Türkiye, and help reduce compliance costs for smaller firms, despite the risks that sharp eligibility thresholds can weaken scale-up incentives.
1.2.2. Protecting and monitoring fair market competition
Safeguarding fair competition is essential to maintaining a business environment in which SMEs can grow on equal terms. Strong competition frameworks and effective oversight institutions play a central role in keeping markets open and ensuring that anti‑competitive practices are identified and addressed. This is particularly important where public resources are involved, as misallocated or selectively distributed support can distort market conditions and undermine competitive neutrality. In public procurement, ensuring fair access for SMEs is especially critical, given that public tenders in the region account for around 10.3% of GDP. At the same time, the significant presence of SOEs can further tilt market conditions where governance arrangements are weak, increasing the risk of resource misallocation and reducing competitive pressure.
Fair competition conditions for SMEs remain uneven across key market frameworks
Across the region, governments have taken steps to strengthen institutional frameworks supporting fair competition and market access for businesses, including SMEs. Competition authorities in Albania and Serbia have expanded their resources and visibility in recent years, helping strengthen their capacity to monitor markets and enforce competition rules. Governing frameworks for SOEs have also been established across all economies, with Bosnia and Herzegovina’s entity of Republika Srpska and Serbia and Montenegro strengthening SOE performance through expanded reporting requirements and enhanced oversight mechanisms. Yet the progress made through institutional improvements has not fully translated into competitive conditions on the ground, which may disproportionately affect smaller firms.
Despite existing frameworks, significant obstacles prevent SMEs from operating under fully competitive conditions. Competition authorities across the region have not introduced programmes or guidance addressing SME-specific competition issues, and enforcement activity in SME-relevant markets remains limited. In parallel, competitive pressures in public procurement have weakened across much of the region (see the next sub-section). Structural distortions linked to SOEs further compound these challenges. Although governance frameworks are in place, many SOEs operate at a loss, and extensive public financial support continues to raise concerns about competitive neutrality. In Bosnia and Herzegovina, Montenegro, and Serbia, SOEs have benefitted from capital injections and state‑backed guarantees, while loss‑making enterprises persist in several sectors. Without systematic monitoring of state support and stronger safeguards against competitive neutrality violations, these practices risk undermining fair competition in markets where SMEs operate.
SMEs capture a large share of public procurement markets, though competitive pressure remains limited
Across the region,8 SMEs account on average for around 77% of public procurement contracts and 72% of total contract value, compared with approximately 60% of contracts and 30% of contract value in the European Union (García Rodríguez, 2023[12]; European Commission, 2020[13]), indicating a comparatively larger role for SMEs in procurement markets. A majority of economies, namely Albania, Bosnia and Herzegovina, Montenegro and Serbia, have introduced policies to encourage SME participation in public procurement, including training programmes for SMEs on tender participation in Albania and simplified procedures for medium-value procurements in Bosnia and Herzegovina. These efforts have been complemented by the widespread use of electronic procurement platforms and broader digitalisation of procurement processes across most economies.9
However, competitive conditions in procurement markets have generally deteriorated since the previous assessment. The average number of bids has decreased in all economies except Albania and Türkiye, to a regional average of 3.2 bids per tender, highlighting a decrease in participation in most markets across the region (Figure 1.2). Furthermore, the share of procedures receiving only a single bid has increased in Bosnia and Herzegovina, Montenegro and North Macedonia, and remained stable in Serbia, reaching a regional average of around 38%10 of tenders (Figure 1.2). This suggests that strong SME participation does not necessarily translate into fully competitive procurement markets. In several economies, these trends are further reinforced by limited progress in implementing reforms to facilitate SME access to procurement markets, as well as by gaps in monitoring procurement dynamics, particularly regarding the concentration and recurrence of awards and the use of contract lot division to broaden participation.
Notes: Data for single-bid tenders is unavailable for Türkiye. Data on single-bid tenders for Kosovo is only for contracts above EUR 10 000.
Source: Adapted from information provided by WBT governments during this assessment.
1.2.3. Providing efficient judicial and out-of-court dispute resolution mechanisms
Timely and efficient dispute resolution is a key element of a fair business environment for SMEs, which are particularly exposed to lengthy and costly legal proceedings due to their limited financial and administrative resources. These constraints make it more difficult for them to absorb prolonged uncertainty, delayed payments or unresolved commercial disputes. When judicial systems are slow or complex, SMEs may be discouraged from pursuing legal remedies altogether, leaving them more vulnerable to contract breaches and unfair business practices. Efficient courts and accessible ADR mechanisms, such as mediation and arbitration, are therefore essential to deliver faster, more proportionate solutions. Effective enforcement of intellectual property rights (IPR) is equally important, as delays or procedural barriers can limit SMEs’ ability to protect innovations and other intangible assets.
Access to timely commercial justice for SMEs remains uneven across the region
Timely resolution of commercial disputes remains uneven across the region, with judicial backlogs and institutional fragmentation continuing to affect SMEs’ ability to enforce contracts. First‑instance civil and commercial cases took a median of 387 days to resolve in the region in 2022 - reflecting the typical duration of proceedings - compared to 239 days in the EU, highlighting a gap in the speed of contract enforcement (European Commission for the Efficiency of Justice (CEPEJ), 2024[14]) (CEPEJ, 2023[15]). Court structures vary across economies, with most operating specialised commercial courts, including Bosnia and Herzegovina, Montenegro, Serbia and Türkiye, while Kosovo introduced this framework in 2022. These courts provide dedicated forums for business disputes, but in practice continue to face significant backlog and lengthy procedures in all economies. In contrast, Albania and North Macedonia rely on civil courts or commercial divisions within general courts, which may limit specialisation and expose commercial disputes to broader caseload pressures. Across the region, these structural differences and persistent backlog pressures continue to affect the speed and predictability of dispute resolution for SMEs.
In parallel, ADR mechanisms are widely established across the region but remain underused and insufficiently tailored to SMEs. Most economies have established legal frameworks for mediation and arbitration, yet uptake remains limited, and monitoring rarely tracks SME participation. While Kosovo, Montenegro, North Macedonia and Türkiye have introduced measures to promote mediation, such as mandatory mediation provisions or small claim mechanisms, uptake remains generally low. Arbitration is also available in all economies, but remains typically concentrated in a small number of institutions, often located in large urban centres, possibly limiting accessibility for smaller regional firms. As a result, despite their potential to reduce costs and accelerate dispute resolution, ADR mechanisms remain an underutilised tool for improving SMEs’ access to justice.
IPR dispute resolution frameworks remain insufficiently tailored to SMEs across the region
IPR dispute resolution frameworks across the region remain largely embedded in general judicial systems, with limited procedures specifically designed to address the needs of SMEs. In most economies, including Albania, Bosnia and Herzegovina, Kosovo and North Macedonia, intellectual property disputes are handled through standard commercial or civil courts rather than specialised procedures, exposing SMEs to the same backlog pressures and procedural complexity affecting broader litigation systems. In Serbia and Türkiye, specialised courts or institutional arrangements exist to handle intellectual property cases, yet the procedures do not include simplified channels tailored to smaller firms. Across the region, these structures can create barriers for SMEs seeking to enforce IPR, as limited financial resources make it more difficult for smaller firms to engage in lengthy or complex litigation.
While some economies have introduced initiatives to strengthen SME awareness or support in the field of intellectual property, targeted dispute resolution mechanisms remain rare. Bosnia and Herzegovina, Serbia and Türkiye are the only economies to have implemented SME-targeted support activities on IPR, including training programmes and advisory services, with Bosnia and Herzegovina introducing an SME-focused intellectual property pre-diagnostics service to help firms assess their intellectual property assets. Despite these initiatives, most measures focus primarily on awareness raising or capacity building rather than on simplifying dispute resolution procedures themselves, and uptake remains limited. As a result, SMEs across the region continue to rely largely on standard court processes when seeking to enforce IPR, limiting the accessibility and effectiveness of protection for smaller firms.
The way forward
Strengthen anti-informality strategies by incorporating SME-sensitive design elements. Governments across the region are encouraged to ensure that anti-informality frameworks better reflect the constraints faced by micro and small firms in complying with tax, labour and regulatory obligations. While most economies have adopted economy-wide strategies to reduce undeclared activity, these could be complemented by proportionate measures for smaller firms, such as simplified administrative procedures, streamlined filing and record-keeping requirements, predictable tax treatment, and well-designed thresholds that minimise disincentives to growth (Box 1.2). Such measures should complement, not substitute for, consistent enforcement and broader efforts to address unproductive informal activity and improve overall productivity.
Italy's regime forfettario provides an example of how targeted tax simplification measures can support formalisation by reducing compliance costs for micro and small businesses. Introduced in 2015, the regime is available to eligible taxpayers engaged in business or professional activities whose annual turnover or professional income did not exceed EUR 85 000 in the previous year, calculated on an aggregate basis across all activities carried out. Eligibility is also subject to a ceiling of EUR 20 000 in gross annual expenditure on ancillary labour, employees and collaborators. The regime replaces the ordinary personal income tax schedule and related surcharges with a single substitute tax, generally set at 15%, and reduced to 5% during the first five years for eligible new activities, provided that the taxpayer has not carried out a business activity during the previous three years and that the new activity does not continue a previously performed employed or self-employed activity, except where this relates to a period of mandatory professional training.
Taxable income is determined on a presumptive basis, by applying a sector-specific profitability coefficient to turnover rather than relying on standard accounting of actual costs. The regime also reduces compliance burdens through simplified VAT treatment, including exemption from charging VAT, filing annual VAT returns and maintaining standard VAT records. These design features reduce the fixed administrative costs associated with formal operation and increase predictability, allowing firms to estimate their tax liabilities through a simpler and more standardised method. For businesses with limited managerial and accounting capacity, this can make formal participation more feasible and easier to sustain over time.
Policy outcomes
The regime has demonstrated strong and sustained uptake since its introduction in 2015. Recent data published by the Italian Ministry of Economy and Finance illustrate the scale of its reach: over the four-year period from 2022 to 2025, approximately 954 000 newly registered individual taxpayers opted for the regime forfettario, representing close to half of all new registrations over that period. By 2025, the share of individual registrations selecting the regime exceeded 70% for the first time, reflecting a broad and growing reliance on the simplified framework among new sole traders.
Policy relevance for the Western Balkans and Türkiye
Italy’s approach illustrates that tax simplification is not only a form of fiscal relief, but also an effective tool for lowering the fixed costs associated with entering and remaining in the formal economy. This supports the case for embedding SME-sensitive design elements into anti-informality strategies, including simplified filing requirements, record-keeping obligations, predictable tax treatment, and threshold structures that minimise disincentives to growth.
Sources: (OECD, 2025[16]) ; (Unimpresa, 2026[17]).
Improve engagement with SMEs to strengthen the detection of anti-competitive practices. SMEs may face greater difficulties identifying and reporting anti-competitive practices, which can weaken the detection of market abuses in sectors where smaller firms are highly represented. Competition authorities across the region are therefore encouraged to strengthen outreach and guidance activities aimed at SMEs, including clearer communication on competition rules and reporting channels, while ensuring that all their engagement respects their mandate of neutrality and treats all firms equitably.
Strengthen monitoring of competition in public procurement to ensure effective market access for SMEs. While SME participation in procurement remains high across the region, declining bidding intensity and the growing prevalence of single-bid procedures suggest that competition pressures may be weakening in several economies. Governments are encouraged to enhance monitoring frameworks to systematically track indicators of competitive dynamics, including the share of single-bid tenders, average number of bids per procedure, and, where feasible, the concentration of contract awards and repeat award patterns. Greater use of procurement design tools, such as the division of contracts into lots, can further support broader participation by reducing the risk of market concentration.
Strengthen the accessibility and use of ADR for commercial disputes involving SMEs. Despite the existence of legal frameworks for mediation and arbitration across the WBT region, the use of ADR mechanisms remains limited, thereby limiting their potential to deliver faster, cost-effective solutions for SMEs. Governments should strengthen efforts to promote ADR through targeted awareness initiatives and closer co-operation with business organisations and chambers of commerce, while improving monitoring frameworks to better track SME participation and outcomes in mediation and arbitration.
Access to finance is a prerequisite for firms to invest, innovate and scale-up. For many SMEs, competitiveness depends not only on internal capabilities, such as the workforce’s skills, but also on the ability to mobilise external funding, including bank credit and equity-type finance. Yet across the WBT region, many SMEs still face constrained access to finance due to high collateral requirements and shallow alternative finance markets. These constraints reduce investment and delay upgrading, limiting firms’ capacity to grow. Strengthening access to finance is therefore a key policy channel to boost SME competitiveness, enabling firms to scale up and build economic resilience.
Available data suggest that access to finance remains a key constraint for SMEs across the WBT region, especially for bank credit, which remains the main source of external financing. Over 2023-2025, the share of firms reporting they were partially or fully credit-constrained was 9.5% in Bosnia and Herzegovina, 12.6% in Albania, 14.0% in North Macedonia, 18.4% in Montenegro and 25.2% in Serbia, rising to 41.8% in Türkiye (World Bank, 2026[18]),11 highlighting the need to strengthen risk-sharing instruments and develop alternative finance channels.
In this context, this section assesses the success of policies in enabling SMEs’ access to bank finance and alternative financing avenues, as well as the direct financial support implemented to encourage SME establishment, operations and growth.
1.3.1. Facilitating bank lending to SMEs
SMEs often face tighter collateral requirements than larger firms, reflecting both higher perceived credit risk and more limited collateral availability. In the WBT region, these challenges are amplified by incomplete asset registration frameworks, which constrain the effective use of movable and immovable assets as collateral. In parallel, instruments intended to ease lenders’ risk perceptions, notably credit guarantee schemes (CGSs), remain unevenly developed, contributing to substantial cross-economy variation in SMEs’ access to bank finance.
Asset registration gaps narrow the available collateral base, hindering the capacity of SMEs to secure loans
Asset registration systems are generally comprehensive across the WBT region, but limited assessment of registry performance and data quality can constrain the effective mobilisation of assets for collateralisation (Table 1.3). For immovable assets, cadastres cover the full territory across all seven economies; however, digitalisation of cadastres remains incomplete in Albania, Bosnia and Herzegovina, North Macedonia and Türkiye. This weakens the reliability of ownership records and makes property registration and the use of real estate as collateral slower and more costly. For movable tangible assets (notably vehicles), registrable intangible assets (e.g. patents and trademarks), and pledge registries used to record security interests over movable property and rights, systems are broadly in place and largely digitalised. Nonetheless, some practical gaps persist: in Bosnia and Herzegovina, fewer than half of movable assets are documented; in Albania, documentation remains incomplete for livestock and agricultural equipment; and in Kosovo, information on asset valuation is limited. Beyond these economy-specific issues, the main regional weakness is the absence of systematic, routine data-quality external assessments across registries. Persistent gaps, particularly related to interconnection, transparency and accuracy, are reported in several economies, such as Albania (European Commission, 2025[19]), Bosnia and Herzegovina (European Commission, 2025[20]) and North Macedonia (European Commission, 2025[21]), underscoring the need for continued upgrades and quality improvements.
Notes: “Full information” refers to: 1) the relevant registry covering the full territory/asset universe within its mandate; and 2) providing comprehensive information on each registered asset (e.g. unique identifier, ownership/title holder and registered encumbrances). “Full digitalisation” refers to the registry being maintained in an electronic database with digitised records and maps (where relevant) and allowing electronic search and updates (online access and digital workflows rather than paper-based files). “Performance evaluation (external)” refers to an external assessment of registry performance and data quality, aimed at identifying discrepancies (e.g. missing or inconsistent entries, outdated records, errors in identifiers/ownership) and informing corrective actions and system upgrades.
Source: Adapted from information provided by WBT governments during the assessment period.
Risk-sharing instruments are underdeveloped or not yet established, leaving SMEs exposed to conservative lending practices
CGSs are increasingly used across the WBT region as a key policy instrument to facilitate SMEs’ access to bank finance (Table 1.4). Apart from Albania and Serbia, economies have established centralised CGSs, with Montenegro in the process of operationalising its Credit Guarantee Fund. Another regional trend is that governments and/or domestic institutions capitalise all operating schemes, while international financial institutions contribute to the capital base only in Kosovo and Türkiye (Table 1.4), which helps strengthen the long-term financial sustainability of these schemes.
Despite this progress, the effect on SMEs’ borrowing conditions is likely to remain modest, as most schemes operate at a limited scale (Table 1.4). Outstanding guarantee portfolios typically amount to around 0.1% of GDP,12 constraining their capacity to meaningfully shift banks’ perceptions of risk for SME lending. More broadly, this also reflects a broader institutional weakness in the WBT region: development-finance institutions that could play a stronger counterbalancing role are, in several cases, not yet fully established, too narrowly mandated, or operating at insufficient scale. As a result, public risk-sharing mechanisms remain too limited to significantly reshape commercial banks' incentives.
Kosovo stands out as the only WBT economy where a CGS operates at a significant scale, as in 2024, the Kosovo Credit Guarantee Fund issued EUR 76.1 million in guarantees, supporting EUR 173.0 million in loans, around 1.7% of GDP (Kosovo Credit Guarantee Fund, 2025[22]). Beyond the limited scale of existing schemes, a key regional weakness is the limited use of systematic performance evaluation: none of the WBT economies with an operating CGS has conducted an external assessment since 2022. As a result, the effectiveness and additionality of the operating CGS remain largely unknown, limiting the evidence base for adjusting their design for a stronger impact on SMEs’ access to credit.
Notes:
*A centralised CGS is a single, economy-level managed guarantee facility that provides guarantees to lenders, typically through a single central guaranteed institution (rather than multiple schemes run by ministries, regions/entities, sector funds, or separate agencies). As access to finance policies is a competency of the entities of Bosnia and Herzegovina, a CGS conducted at the entity level is considered a centralised scheme.
**Government of Kosovo, the United States Agency for International Development and the German Development Bank (KfW).
***Under the 2025 Law on the Credit Guarantee Fund, the Fund’s initial capital of EUR 10.6 million is to be provided by the Government of Montenegro. The law also foresees that the Fund’s capital base may be supplemented by irrevocable donations or grants, including from international financial institutions and other donors.
****The Union of Chambers and Commodity Exchanges of Türkiye (TOBB), Türkiye’s Small and Medium Enterprises Development Organisation (KOSGEB), 29 Turkish banks and the European Investment Fund.
Sources:
1. Information provided by the Development Bank of the Federation of Bosnia and Herzegovina for this assessment;
2. SRNA (2025[23]);
3. Kosovo Credit Guarantee Fund (2025[22]);
4. Development Bank of North Macedonia (2025[24]);
5. Kredi Garanti Fonu (2025[25]).
1.3.2. Providing alternatives to bank finance
Alternative sources of finance remain underdeveloped across the WBT region, leaving SMEs largely reliant on bank credit to fund operations and investment. Equity markets play a marginal role for SME financing: listings are dominated by long-established firms, and new SME entrants are rare. Corporate bond markets exist, but banks and a small set of larger corporates largely drive issuance. Early-stage finance is also shallow, leaving young and innovative firms with few options for diversifying their external financing sources.
Capital markets remain shallow and underdeveloped, which maintains the bank dependency of SMEs
Capital markets in the WBT region remain a largely untapped source of finance for SMEs, and policies to expand SMEs’ use of equity and bond markets remain limited across the region (Table 1.5). Overall, four economies of the WBT region have introduced dedicated SME segments, mainly through lighter admission requirements and simplified reporting: Montenegro, North Macedonia, Serbia and Türkiye. However, these segments have generally not translated into a meaningful pipeline of SME listings, especially in the Western Balkans, where the domestic investor base is narrow and the costs and administrative requirements associated with listing may further limit SME take-up.
To mitigate the constraints of small economic size, policies can reduce the costs of market-based financing and strengthen secondary-market liquidity to support trading in equities and bonds. However, none of the Western Balkan economies has adopted targeted measures to reduce issuance and listing costs or to support post-issuance trading. By contrast, Türkiye complements its dedicated SME segment (e.g. Emerging Companies Market) with measures that cut initial public offering (IPO) costs and reinforce incentives, such as fee waivers, 50% reductions in selected trading and maintenance fees, and a 2 percentage-point corporate tax cut conditional on a minimum free float, coinciding with 128 IPOs between 2022 and 2024.13 Comparable initiatives to deepen SME corporate bond issuance, however, have not been introduced.
Notes:
1. Albania operates the Albanian Securities Exchange, licensed in 2017 and operational since February 2018; however, market activity remains very limited, with trading largely concentrated in government securities.
2. No stock exchange operates in Kosovo.
Source: Adapted from information provided by WBT governments during the assessment period.
Limited access to early-stage capital keeps young and innovative SMEs reliant on bank financing
Early-stage finance remains underdeveloped across the Western Balkan economies, while it has gained significant traction in Türkiye. In 2024, venture capital (VC) investment totalled EUR 35.8 million in the Western Balkans 6 (WB6), compared with EUR 2.5 billion in Türkiye (Dealroom, 2025[26]).14 The development of early-stage finance is shaped, first and foremost, by whether economies have established a dedicated legal framework for VC and private equity (PE) funds, with a mixed picture across the WBT economies (Table 1.6). Dedicated legal frameworks for alternative investment funds (AIF) are in place in Bosnia and Herzegovina (the entity of Republika Srpska), Montenegro, Serbia and Türkiye, while North Macedonia and Kosovo are still working toward their adoption.
However, policies to develop VC and PE markets remain largely absent across the region (Table 1.6). Türkiye stands out for combining a dedicated regulatory framework with a comprehensive set of proactive policies to scale VC and PE, including public fund-of-funds vehicles, most notably through the Türkiye Development Fund, to crowd in private investors. In addition, Türkiye has introduced a regulatory incentive requiring private pension funds to allocate at least 1% of their portfolio to VC funds, helping to mobilise institutional capital for early-stage finance. Serbia has also introduced a targeted public programme to help establish VC funds (e.g. Serbia Ventures under the Innovation Fund), although its scale remains limited.
Source: Adapted from information provided by WBT governments during the assessment period.
1.3.3. Providing direct financial support to SMEs’ operations and growth
When SMEs face tight credit conditions and limited alternatives to bank finance, governments can help close financing gaps that often stem from structural constraints such as limited collateral, short credit histories, high perceived risk and weak information available to lenders. Targeted grants, credit lines and similar instruments can support not only business creation but also growth-oriented investments in innovation, internationalisation, greening and digital transformation, helping address financing gaps while complementing and crowding in private finance to strengthen SME capabilities and competitiveness.
Direct financial support for SME growth is expanding, but remains uneven and often donor-driven
To ease SME financing constraints, WBT economies have expanded targeted financial support to foster SME establishment and growth (Table 1.7). However, donor-funded instruments remain particularly important in several economies, notably in Albania, Kosovo and Montenegro, highlighting gaps in scalable, domestically funded programmes and raising questions about the long-term sustainability and predictability of support. Support also varies across policy areas: internationalisation is largely financed through domestic institutions; innovation and digital transformation show a more mixed funding base; and SME greening remains predominantly donor-driven across the region.
Notes: “Mostly domestic” indicates that the bulk of the active programmes are domestic instruments; “Mixed” indicates that donor instruments remain a pillar of the targeted support, but at least a major domestic instrument also provides support; “Mostly donors” indicates that the bulk of the active programmes are donor instruments; “N/A” indicates the absence of targeted instrument.
Source: Adapted from information provided by WBT governments during the assessment period.
Targeted financial support is rarely assessed through regular outcome evaluations
Across the WBT region, most targeted financial support for SME innovation, internationalisation, greening and digital transformation is monitored through standard public financial management and audit processes, mainly by tracking budgets and take-up. Overall, regular outcome-based evaluations remain largely absent across the WBT economies, limiting feedback loops and reducing the scope to demonstrate results and adjust programmes to maximise the impact of SME growth.
The way forward
Strengthen credit guarantee schemes through scaling up their capitalisation and introducing systematic performance evaluation.
For economies with a centralised and operational CGS (Bosnia and Herzegovina [Federation of Bosnia and Herzegovina, Republika Srpska], Kosovo, North Macedonia and Türkiye): Prioritise multi-year capitalisation funded by development-finance institutions, such as development banks and other public financial intermediaries, to raise outstanding portfolios toward a level that can significantly improve SMEs’ credit conditions. Moreover, external performance evaluations should be conducted regularly to calibrate the CGS’s design, thereby maximising the effectiveness of the schemes.
For economies without/in the process of operationalising a centralised and operational CGS (Albania, Montenegro, Serbia): From the outset, schemes should be supported by a multi-year capitalisation plan and a minimum monitoring and evaluation framework, with regular publication of core indicators (e.g. portfolio size and leverage, beneficiaries, defaults/claims and recoveries), to build credibility, enable course corrections and support gradual scaling.
Develop a coherent SME capital-market agenda to broaden the investor base and facilitate SME issuance of equity and bonds. In parallel with developing SME market segments, the WBT economies, particularly in the Western Balkans, should deepen domestic institutional and retail investor participation to ensure sufficient demand and secondary-market liquidity given their limited economic size (Box 1.3). Pilot initiatives, such as the Western Balkans Opportunities by Non-traditional Debt,15 can be leveraged to build an SME bond pipeline. However, they should be embedded in a domestically anchored capital-market development strategy.
Develop a coherent early-stage finance agenda by strengthening legal frameworks for early-stage financing and introducing proactive policies to build the fund pipeline.
For economies without a dedicated legal framework for early-stage financing (Albania, Bosnia and Herzegovina [Federation of Bosnia and Herzegovina], Kosovo and North Macedonia): Priority should be given to adopting and operationalising dedicated regimes for VE/PE and AIFs, aligned with the EU acquis, so that VC/PE funds can be established domestically and attract both local and international investors.
For economies with a dedicated legal framework for early-stage financing (Bosnia and Herzegovina [Republika Srpska], Montenegro, Serbia, Türkiye): Focus should shift to scaling the market through targeted instruments that crowd in private capital. This includes public or blended fund-of-funds vehicles, matched funding for first-time funds, tax and co-investment incentives for business angels, and predictable multi-year public funding, alongside strong governance and regular performance evaluation to ensure additionality.
Strengthen targeted financial support for SME growth, anchored in domestic institutions, and regularly evaluate its impact.
For economies with strong donor-dependency (Albania, Bosnia and Herzegovina, Kosovo and Montenegro) or domestic policy tools of limited size (Bosnia and Herzegovina): To enhance the sustainability and predictability of direct financial support to SMEs, these economies should progressively reduce reliance on short-term donor-funded instruments and develop support schemes provided by development-finance institutions, such as development banks and other public financial intermediaries.
For economies with mostly structured domestic support schemes (North Macedonia, Serbia, Türkiye): Regular outcome-based evaluations of grants, credit lines and related support instruments should be introduced or strengthened to assess their effectiveness, improve targeting, and inform future policy design.
Estonia’s policy approach to strengthening the investor base
To encourage SME use of capital markets, Estonia has combined participation in a low-capitalisation market segment with measures to support the investor base. On the supply side, Estonia joined Nasdaq’s SME growth market (First North)1 in 2007, enabling SMEs to access capital markets under lighter admission and reporting requirements. On the demand side, Estonia introduced an investment account in 2011, which allows retail investors to defer personal income tax on investment income and capital gains, thereby broadening retail participation in listed shares and bonds (Estonian Tax and Customs Board, 2026[27]). Moreover, the 2021 second-pillar pension reform introduced a pension investment account, allowing individuals to invest pension assets in capital-market instruments, strengthening long-term domestic market demand (Ministry of Finance, 2021[28]).
Policy outcomes
Available evidence points to growing retail participation. As of June 2023, about 111 600 Estonian residents with a securities account held at least one security traded on the exchange, up from 98 000 in June 2021 (ERR News, 2024[29]). In parallel, the number of Estonian firms listed on First North increased from 1 in December 2018 to 12 in December 2025, with a total market capitalisation of EUR 100.3 million (OECD calculations based on Nasdaq Baltic (2026[30])).
Policy relevance for the Western Balkans and Türkiye
Despite its small size, Estonia illustrates how investor base policies can complement the introduction of SME market segments, building steady demand for SME shares and corporate bonds and supporting market liquidity, provided they are paired with strong regulatory standards (e.g. disclosure, transparency, supervision).
Notes: 1. First North Growth Market is Nasdaq’s SME growth market (MTF/SME Growth Market). It operates across Denmark, Finland, Iceland, Sweden, and the Baltic markets (Estonia, Latvia, Lithuania). For more details, see Nasdaq (2026[31]).
While access to finance is often a key constraint, firms’ growth prospects also depend heavily on their ability to access managerial knowledge, specialised advice and practical support for upgrading their operations. Business support services (BSSs) – including training, mentoring and advisory assistance – therefore represent an important policy instrument through which governments can help SMEs strengthen capabilities, adopt new technologies and improve market access (OECD, 2021[32]).
Across the WBT region, governments have expanded SME support systems over the past decade, introducing a growing range of training programmes, advisory schemes and innovation support instruments. However, BSS ecosystems in the region continue to operate under structural constraints linked to fragmented programme delivery, uneven institutional capacity and underdeveloped advisory markets (OECD, 2022[33]). As a result, many SMEs still face difficulties accessing specialised expertise, while support measures are not always sufficiently co-ordinated or aligned with firms’ different stages of development. Addressing these gaps is also important in the context of regional initiatives, such as the Common Regional Market and the Green and Digital Agenda for the Western Balkans, which emphasise SME capability upgrading, innovation adoption and deeper integration into regional and European value chains.
Against this backdrop, this section examines how SME BSSs are organised and delivered across the WBT region. It first analyses foundational BSS systems, focusing on service delivery structures, the role of private advisory markets and the availability of monitoring and diagnostic mechanisms. It then examines support services for SME expansion and growth, including innovation, digitalisation, green transition, and internationalisation instruments that enable firms to scale and integrate into regional and global value chains.
1.4.1. Foundational SME business support services
Understanding how foundational BSSs are organised and delivered is essential for strengthening SME competitiveness and enabling firms to progress toward more advanced growth-oriented support. These services typically constitute the first entry point into SME support systems, providing training, advisory assistance and basic capability building for entrepreneurs and small firms. Across the WBT region, however, foundational BSS systems remain characterised by strong public-sector dominance and limited development of private advisory markets, while the use of outcome-oriented monitoring and SME diagnostics remains limited in informing programme design.
Foundational BSS systems remain predominantly publicly delivered, limiting the development of independent advisory markets
Across the WBT region, foundational BSSs are primarily delivered through public institutions, with SME support agencies, development funds and specialised public programmes forming the core of the support architecture. This is evidenced by the central role of national SME agencies as key delivery channels for foundational services, including institutions such as KOSGEB in Türkiye and KIESA in Kosovo, with comparable arrangements observed across the region. These institutions typically serve as the primary entry points for firms to access training, mentoring and advisory services, particularly for early-stage entrepreneurship and basic capability building.
While private providers participate in BSS delivery, their role is typically embedded within publicly funded programmes rather than operating through independent advisory markets. Although private advisory providers can complement public BSS delivery by offering specialised expertise and tailored consulting services, their engagement remains largely programme-driven. In several economies, private service providers are engaged mainly through donor-funded initiatives or subcontracting within public support schemes, while structured market mechanisms, such as accreditation systems, advisory vouchers or performance-based contracting, remain limited. Across the region, donor-supported programmes (e.g. the European Bank for Reconstruction and Development) and business transformation initiatives have expanded the role of private consultants, indicating the presence of advisory capacity. However, this capacity remains weakly connected to the broader SME base, as access is still mediated through individual programmes rather than system-level mechanisms. As a result, advisory markets across the region remain small, geographically concentrated and closely linked to public demand. Even where private providers are formally integrated into support programmes, such as in Montenegro, North Macedonia and Türkiye, their activity remains largely programme-driven, with consultants typically engaged through publicly funded or co-financed schemes, including voucher-based advisory support and structured mentoring programmes, rather than supported by diversified advisory ecosystems (Table 1.8).
Notes:
1. Programme-based participation refers to private consultants engaged through publicly funded schemes.
2. Institutionalisation refers to the presence of formal mechanisms such as accreditation systems, voucher schemes or performance-based contracting that enable SMEs to access advisory services independently of individual programmes.
3. In Bosnia and Herzegovina, BSS delivery is organised primarily at the entity level, but private advisory provision remains largely project-based across both entities, without formal accreditation systems or market-shaping instruments.
4. Partial indicates that some of these mechanisms are in place but remain limited in scope, coverage or implementation.
Source: Adapted from information provided by WBT governments during the assessment period.
Limited use of outcome-oriented monitoring and SME diagnostics constrains the evidence base for designing foundational BSS programmes
Monitoring and evaluation systems for foundational BSSs across the WBT region remain largely focused on administrative reporting rather than systematic assessment of programme effectiveness and firm-level outcomes. Most economies collect detailed information on programme implementation, such as the number of supported firms, grants awarded or training activities delivered, but track longer-term outcomes, including productivity improvements, innovation uptake, export performance or sustained employment creation, less systematically. In Albania, Bosnia and Herzegovina, and Serbia, monitoring frameworks primarily focus on financial execution and output indicators. Kosovo and North Macedonia rely largely on programme-level reporting and beneficiary surveys. Türkiye operates more structured monitoring tools, including digital dashboards, KPI-based programme tracking and external audits, providing stronger oversight of implementation. However, these systems remain largely input-and output-oriented, with limited outcome-level evaluation and no integrated mechanism to track SME progression across support stages, constraining their ability to inform programme design.
These evidence gaps are further reinforced by the limited use of systematic SME diagnostics to inform programme design. Regular training needs assessments or comprehensive capability diagnostics remain rare across the WBT region. With the exception of Montenegro, where a structured training needs assessment and monitoring methodology16 has been introduced, most economies rely on consultations with SMEs, sector studies, or project-based surveys that provide partial insights into SME needs. These consultations are not systematically integrated into policy planning cycles. As a result, governments face difficulties tailoring support services to different SME maturity levels, identifying emerging capability gaps, and adjusting programmes based on measurable competitiveness outcomes.
1.4.2. Support services for SMEs’ expansion and growth
Enabling SMEs to expand, upgrade and compete in regional and global markets requires a coherent system of BSSs that spans innovation, digitalisation, green transition and internationalisation. Such systems must not only provide access to individual instruments, but also ensure continuity across growth stages and depth in advanced competitiveness support. Across the WBT region, while the range of SME growth-oriented services has expanded, important structural gaps persist in sequencing, institutional depth and policy learning, limiting the ability of support ecosystems to translate participation into sustained competitiveness gains.
SME support ecosystems are expanding but remain weakly sequenced across growth stages
Across the WBT region, SME support portfolios for expansion and growth have broadened to include innovation, digitalisation, green upgrading and internationalisation. Serbia and Türkiye operate the most extensive infrastructures spanning incubators, accelerators and export programmes, while Albania, Kosovo and North Macedonia have expanded delivery through acceleration schemes and digital hubs. Bosnia and Herzegovina and Montenegro show more gradual progress, with support still concentrated on early-stage entrepreneurship and horizontal competitiveness measures.
Despite this expansion, instruments are rarely organised into coherent growth-stage sequences linking early capacity building with scale-up and sustained competitiveness. Innovation, digital and export measures frequently operate as standalone schemes, and acceleration and investment-readiness support remain unevenly institutionalised. This results in a persistent “missing middle” between early-stage support and growth-stage scaling, with gaps at key transition points in the firm life cycle — particularly from incubation to early growth, from innovation to commercialisation, from capability-building to investment readiness, and from domestic market consolidation to export readiness and value chain integration. The challenge is compounded by the spatial concentration of accelerator and advanced BSS infrastructure in major urban hubs, limiting access for firms outside these centres and reinforcing discontinuities in growth-stage support.
Internationalisation support represents the most operational component of BSSs for SME growth, yet it remains largely activity-driven and insufficiently embedded in institutional frameworks that support firm upgrading and value-chain integration
Export promotion for SMEs has strengthened across all economies through dedicated strategies, digital platforms and expanded advisory and matchmaking tools. Serbia and Türkiye operate the most comprehensive internationalisation architectures, combining financial incentives, standards support and cluster-based initiatives, while Albania and North Macedonia have introduced more structured export frameworks through export portals, diagnostics and mentoring. Bosnia and Herzegovina, Kosovo and Montenegro have expanded export promotion activities, though delivery often remains centred on trade fair participation and project-based advisory services.
While these instruments facilitate market entry and firm visibility, they are less consistently complemented by integrated instruments that combine certification, export finance, standards compliance and structured supplier development mechanisms. Export promotion and export finance often operate through separate institutional channels, and supplier development frameworks remain unevenly institutionalised. As a result, internationalisation BSSs tend to function as exposure-based instruments rather than as integrated competitiveness frameworks supporting sustained upgrading and value-chain integration (Table 1.9). This variation reflects differences in institutional maturity across economies, particularly in cluster upgrading, SME-multinational enterprise (MNE) linkages and supplier development architecture, which remain central to translating export participation into structural competitiveness gains.
Legend: Established = Formalised and operational economy-wide; Developed = Comprehensive and institutionally embedded; Advanced = Institutionalised, economy-wide and operating at scale, with remaining gaps in impact evaluation or systemic integration; Partial = Limited scope or co-ordination; Limited = Isolated measures; Emerging = Early-stage or project-based; Pilot stage = Testing phase.
Notes:
1. Export entry instruments include trade fair participation grants, export promotion portals, advisory and matchmaking services, export catalogues and basic market information tools.
2. Export-readiness and upgrading instruments include certification and standards support, export finance, export diagnostics, mentoring, quality upgrading and digital trade tools.
3. Institutionalised value-chain integration BSS include structured supplier development programmes, SME-MNE linkage mechanisms, cluster-based export upgrading initiatives and co-ordinated value-chain integration frameworks.
4. In Bosnia and Herzegovina, SME and industrial policy competences are primarily exercised at the entity level (Federation of Bosnia and Herzegovina and Republika Srpska). State-level export promotion is implemented mainly through the Foreign Trade Chamber (FTC/BHEPA), which provides operational export promotion services across both entities but does not constitute a fully integrated export policy or supplier development framework.
Source: Adapted from information provided by WBT governments during the assessment period.
The way forward
Gradually develop private advisory markets to complement public business support service delivery and expand SMEs’ access to specialised expertise. Across the region, foundational BSSs remain predominantly delivered through public programmes, with private consultants typically engaged as implementers within publicly funded or donor-supported initiatives, rather than as independent advisory providers.
For economies where advisory markets remain largely project-based (Albania, Bosnia and Herzegovina, Kosovo and Serbia): Governments are encouraged to introduce accreditation frameworks and pilot demand-side tools, such as advisory vouchers or SME-choice co-financing, to allow firms to access qualified private providers (Box 1.4).
For economies where private providers are partially integrated into BSS delivery (Montenegro, North Macedonia and Türkiye): Policy efforts should focus on strengthening quality assurance systems and linking accreditation to voucher schemes or performance-based contracting (Box 1.5).
Strengthen the use of SME diagnostics and outcome-oriented monitoring to support evidence-based business support service design. Monitoring of BSSs across the WBT region remains largely focused on implementation and output indicators, limiting policy learning and programme adjustment. Governments are encouraged to introduce systematic SME diagnostics, including training needs assessments, and embed a small set of outcome indicators across key BSS instruments.
For economies where monitoring remains largely output-based (Albania, Bosnia and Herzegovina, Kosovo and Serbia): Priority should be given to introducing regular SME diagnostics and outcome indicators within BSS programmes, complemented by periodic independent evaluations of flagship instruments.
For economies with more structured monitoring practices (Montenegro, North Macedonia, and Türkiye): Efforts should focus on consolidating existing monitoring tools into unified frameworks that track SME progress across support stages.
Strengthen growth-stage SME support by operationalising structured upgrading, scale-up and supplier development pathways. While innovation, digitalisation and export promotion instruments have expanded across WBT economies, support services often remain weakly sequenced across SME growth stages and insufficiently anchored in value-chain upgrading frameworks. Governments should strengthen the continuity of SME support by linking early capacity-building instruments with acceleration programmes, investment-readiness support, export-readiness advisory, and supplier development initiatives aligned with regional and EU value chains.
For economies where growth-stage support remains limited (Albania, Bosnia and Herzegovina, Kosovo and Montenegro): Priority should be given to developing structured acceleration programmes, scale-up advisory services, certification and standards-upgrading support, and export-readiness instruments linking capacity upgrading with market expansion.
For economies with more developed growth-stage ecosystems (North Macedonia, Serbia and Türkiye): Efforts should focus on strengthening supplier development programmes, SME-MNE linkages, and cluster-based upgrading initiatives, enabling domestic SMEs to integrate more effectively into regional and European value chains.
Ireland’s policy approach to strengthening SME access to external advisory services
Ireland has developed advisory voucher schemes designed to encourage SMEs to engage external expertise and strengthen firm capabilities. These programmes are implemented by several public enterprise support institutions, including Enterprise Ireland (EI), the Local Enterprise Offices (LEOs) and InterTradeIreland. They provide small grants for SMEs to purchase specialised services from external consultants or knowledge providers. Key instruments include the Trading Online Voucher, administered through the LEO network to support SMEs in developing their online presence and digital capabilities, and the Innovation Voucher, delivered by EI that enables firms to access expertise from research organisations and knowledge providers. InterTradeIreland also offers a Trade Accelerator Voucher, supporting microenterprises in obtaining professional cross-border trading advice and facilitating SME engagement with specialised advisory services.
Policy outcomes
Ireland’s voucher schemes have supported widespread SME engagement with external advisory services. Since the launch of the Innovation Voucher programme in 2007, more than 5 600 vouchers have been redeemed by SMEs. Impact evaluations suggest that the programme has generated strong returns, with an estimated EUR 7 increase in business value for every euro invested.
Policy relevance for the Western Balkans
Ireland illustrates how demand-side instruments can stimulate SME use of external advisory expertise while supporting the development of professional service markets. By lowering the cost of accessing specialised knowledge and encouraging firms to engage with external providers, voucher schemes can complement public advisory services and strengthen SMEs’ capabilities in areas such as innovation, digitalisation and internationalisation.
Notes: Innovation vouchers provide grants of EUR 5 000 for SMEs to access expertise from registered knowledge providers. The Trading Online Voucher provides matched grants of up to EUR 2 500 to help SMEs develop digital capabilities.
Source: OECD (2019[34]).
Belgium’s policy approach to strengthening SME access to external advisory services
Belgium (Flanders) operates the SME Wallet (KMO‑Portefeuille), a long‑standing voucher scheme that enables SMEs to purchase external advisory and training services from registered and accredited private providers. The programme is administered by the regional agency VLAIO, which manages the accreditation system and ensures that only approved consultants can deliver subsidised services. Under the scheme, SMEs can apply for small grants—typically between EUR 100 and EUR 25 000—to access services such as strategic advice, innovation support, internationalisation planning, and specialised training. A key reform introduced in 2016 linked voucher eligibility directly to accredited providers, strengthening service quality and alignment with SME needs.
Policy outcomes
The SME Wallet has supported large-scale SME engagement with private advisory markets. The programme has an annual budget of around EUR 50 million and supports approximately 30 000 projects each year, illustrating its wide reach and strong uptake among SMEs. OECD analysis highlights that the introduction of the accreditation requirement has improved quality assurance, increased transparency, and reinforced the credibility of private advisors delivering publicly supported services. By channelling demand through vetted providers, the scheme has contributed to a more professional and competitive private consulting market in Flanders.
Policy relevance for the Western Balkans and Türkiye
Belgium demonstrates how voucher schemes can be used not only to lower the cost of accessing external expertise, but also to shape and professionalise private advisory markets. The direct link between accreditation and voucher eligibility provides a clear model for Western Balkan economies—such as Montenegro, North Macedonia, and Türkiye—where private advisors are already partially integrated into BSS delivery. By tying public funding to accredited consultants and embedding quality assurance mechanisms, governments can raise advisory standards, strengthen the credibility of private providers, and ensure that SMEs receive high‑quality, needs‑oriented support.
Note: The SME Wallet provides co‑financed grants for training and strategic advisory services from accredited providers; small firms can receive up to EUR 10 000 covering 40% of costs, while medium‑sized enterprises can receive up to EUR 15 000 covering 30%.
Source: OECD (2021[35]))
References
[37] Andrews, D., A. Caldera Sánchez and Å. Johansson (2011), “Towards a Better Understanding of the Informal Economy”, OECD Economics Department Working Papers, No. 873, OECD Publishing, Paris, https://doi.org/10.1787/5kgb1mf88x28-en.
[15] CEPEJ (2023), HFIII: Towards a better evaluation of the results of judicial reform efforts in the Western Balkans - Kosovo profile, https://rm.coe.int/kosovo-deliverable-2/1680ad53b0#:.
[26] Dealroom (2025), Stats & Insights, https://app.dealroom.co/curated-heatmaps/funding/location/f/growth_stages/not_mature/rounds/not_GRANT_SPAC%20PRIVATE%20PLACEMENT/tags/not_outside%20tech?endYear=2024&heatMapType=location&id=70546&interval=yearly&rows=australia%7Eaustria%7Ebelgium%7Ecanada (accessed on 18 June 2025).
[24] Development Bank of North Macedonia (2025), Annual Report 2024, https://www.mbdp.com.mk/en/AboutUs/IzvestaiNaBankata/27.
[29] ERR News (2024), Interest in Securities Accounts in Estonia on the Rise, https://news.err.ee/1609440317/interest-in-securities-accounts-in-estonia-on-the-rise (accessed on 3 March 2026).
[27] Estonian Tax and Customs Board (2026), Securities and Investment Account, https://www.emta.ee/en/private-client/taxes-and-payment/taxable-income/securities-and-investment-account (accessed on 4 March 2026).
[38] European Commission (2026), Commission delivers EUR 171 million support package for infrastructure and businesses in the Western Balkans, https://ec.europa.eu/commission/presscorner/detail/en/ip_26_230.
[19] European Commission (2025), Albania 2025 Report, https://enlargement.ec.europa.eu/document/download/fe9138b7-90fe-4277-a12c-3a03f6d1957f_en?filename=albania-report-2025.pdf.
[20] European Commission (2025), Bosnia and Herzegovina 2025 Report, https://enlargement.ec.europa.eu/document/download/5d8fc547-f8f8-456f-84e3-b38998acfafd_en?filename=bosnia-and-herzegovina-report-2025.pdf.
[21] European Commission (2025), North Macedonia 2025 Report, https://enlargement.ec.europa.eu/document/download/267b368e-6b55-4a42-bb72-6395593de4da_en?filename=north-macedonia-report-2025.pdf.
[13] European Commission (2020), Analysis of SMEs’ Participation in Public Procurement and the Measures to Support It, https://ec.europa.eu/docsroom/documents/42102/attachments/1/translations/en/renditions/native.
[14] European Commission for the Efficiency of Justice (CEPEJ) (2024), Individual Country Profiles, https://www.coe.int/en/web/cepej/individual-country-profiles5.
[12] García Rodríguez, M. (2023), European Public Procurement (2012–2022): Indicators and Maps of Competition and SME Participation for Cross-border Analysis based on TED Data, https://ted.europa.eu/documents/d/ted/final_report-european-public-procurement-2012-2022-based-on-data-analysis_-manuel-garcia.
[7] Government of Estonia (2011), Rules for Good Legislative Practice and Legislative Drafting, https://www.riigiteataja.ee/en/eli/508012015003/consolide.
[9] International Labor Organization (ILO) (2026), ILOSTAT - Country profiles, https://ilostat.ilo.org/fr/data/country-profiles/.
[22] Kosovo Credit Guarantee Fund (2025), Annual Report 2024, https://fondikgk.org/wp-content/uploads/2025/09/ANNUAL-REPORT-2024.pdf.
[25] Kredi Garanti Fonu (2025), Activity Report 2024, https://www.kgf.com.tr/index.php/en/information-center/activity-reports.
[28] Ministry of Finance (2021), Restructuring of the Second Pillar of the Funded Pension, Government of Estonia, https://www.fin.ee/en/restructuring-second-pillar-funded-pension (accessed on 4 March 2026).
[31] Nasdaq (2026), Nasdaq Nordic and Baltic Membership List, https://www.nasdaq.com/solutions/nordic-baltic-membership-list?page=1&rows_per_page=10 (accessed on 3 March 2026).
[30] Nasdaq Baltic (2026), Capitalisation, https://nasdaqbaltic.com/statistics/en/capitalization (accessed on 4 March 2026).
[36] OECD (2026), Connecting FDI and SMEs for productivity and innovation in Europe., https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/11/connecting-fdi-and-smes-for-productivity-and-innovation-in-europe_7fe941fa/9848e952-en.pdf.
[4] OECD (2025), Better Regulation Practices across the European Union 2025, OECD Publishing, Paris, https://doi.org/10.1787/6f007516-en.
[10] OECD (2025), Economic Convergence Scoreboard for the Western Balkans 2025, OECD Publishing, Paris, https://doi.org/10.1787/bc0babf3-en.
[5] OECD (2025), Government at a Glance 2025, OECD Publishing, Paris, https://doi.org/10.1787/0efd0bcd-en.
[16] OECD (2025), Social Economy in Europe: Italy, https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/12/social-economy-in-europe-country-notes_2a940194/italy_17c33ddc/b59ff4e5-en.pdf.
[3] OECD (2023), Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes 2023, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/a4c818d1-en.
[1] OECD (2022), Recommendation of the Council on SME and Entrepreneurship Policy, OECD/LEGAL/0473, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0473.
[33] OECD (2022), SME Policy Index: Western Balkans and Turkey 2022: Assessing the Implementation of the Small Business Act for Europe, SME Policy Index, OECD Publishing, Paris, https://doi.org/10.1787/b47d15f0-en.
[35] OECD (2021), “Business advice for entrepreneurship and small firms”, OECD SME and Entrepreneurship Papers, No. 23, OECD Publishing, Paris, https://doi.org/10.1787/299705ad-en.
[32] OECD (2021), OECD SME and Entrepreneurship Outlook 2021, OECD Publishing, Paris, https://doi.org/10.1787/97a5bbfe-en.
[6] OECD (2020), Regulatory Impact Assessment, OECD Best Practice Principles for Regulatory Policy, OECD Publishing, Paris, https://doi.org/10.1787/7a9638cb-en.
[34] OECD (2019), SME and Entrepreneurship Policy in Ireland, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/e726f46d-en.
[8] RCC (2026), Balkan Barometer 2025 - Infographics, https://www.rcc.int/download/docs/BB25-Infographics-ALL.pdf/43c00880d4d98264593095ff9b260f42.pdf.
[2] Regional Cooperation Council (RCC) (2025), Balkan Barometer 2025 Business Opinion: Key Findings, https://www.rcc.int/balkanbarometer/key_findings_2025/1/business.
[23] Srpska National (SRNA) (2025), Report on the Operations of the Guarantee Fund for 2024 was considered, https://www.srna.rs/sr/novost/1345158/razmotren-izvjestaj-o-poslovanju-garantnog-fonda-za-2024.-godinu (accessed on 18 November 2025).
[17] Unimpresa (2026), Nel 2025 500mila nuove partite IVA, tra le persone fisiche 7 su 10 scelgono il “forfettario”, https://www.unimpresa.it/nuove-partite-iva/72596.
[18] World Bank (2026), “Topics - Finance”, Enterprise Surveys, https://espanol.enterprisesurveys.org/en/data/exploretopics/finance?subGroup=-1&subtopic=37 (accessed on 26 February 2026).
[11] World Bank (2024), Informal Economy Database, https://www.worldbank.org/en/research/brief/informal-economy-database.
← 1. OECD calculations based on data compiled from national statistical offices of the WBT economies.
← 2. SME density is measured as the number of SMEs per 1 000 inhabitants. In the WBT, this averages around 44 enterprises per 1 000 inhabitants, falling to approximately 31 when excluding the notable outlier of Montenegro (with over 90 SMEs per 1 000 inhabitants). In EU economies, SME density stands at an average of around 58, although values vary across countries and regions (OECD, 2026[36]). Estimates for the WBT are OECD calculations based on data provided by the economies.
← 3. Serbia continues operating the ePapir programme since 2019, while Kosovo adopted its Administrative Burden Prevention and Reduction Programme in late 2022.
← 4. Albania and Montenegro are the only assessed WBT economies reporting PPCs for over 90% of draft laws in 2024, calculated after excluding draft laws formally exempted from consultation requirements. It should be noted that the scope of such exemptions is distinctly broad in both economies, implying that consultations apply in practice to a much smaller share of all draft laws adopted during the calendar year.
← 5. In the case of Bosnia and Herzegovina, aligned with constitutional competencies.
← 6. The informal economy refers to economic activities and transactions involving legal goods and services that are not fully declared to the authorities, therefore remaining partly or fully unmeasured, untaxed, or non-compliant with applicable legal and regulatory obligations. The calculation does not include non-marketable household production or illegal activities, which are usually treated separately because they follow different logics and raise different policy concerns (Andrews, Caldera Sánchez and Johansson, 2011[37]). Given that informal activity is not directly recorded in official data, its size must be inferred through estimation methods. As different methodologies capture different dimensions of informality, the resulting figures should be treated as indicative rather than exact.
← 7. These measures are not directly comparable, as GDP-based estimates capture a broad range of undeclared activities – including within formal firms – while employment-based indicators reflect informal jobs.
← 8. Western Balkans economies (except Montenegro). No data are available for Türkiye.
← 9. Albania, North Macedonia, Serbia and Türkiye have introduced upgrades to their digital procurement frameworks, including expanded electronic communication in procurement procedures and the introduction of new digital tools, such as North Macedonia’s e-marketplace for low-value procurements, which can facilitate SME participation in smaller tenders. These developments may help strengthen the role of electronic procurement platforms in supporting supplier participation and improving the general accessibility to public tenders, including for SMEs.
← 10. OECD calculations based on data provided by the economies. The data does not include Türkiye.
← 11. No recent data are available for Kosovo.
← 13. Information provided by the Government of Türkiye for this assessment.
← 14. OECD calculations.
← 15. Announced by the European Commission in January 2026 under the Western Balkans Investment Framework, the Western Balkans Opportunities by Non-traditional Debt (W-BOND) pilot programme aims to expand SME access to finance by diversifying funding sources beyond traditional bank lending. For more details, see European Commission (2026[38]).
← 16. Under Montenegro’s Programme for Improving the Competitiveness of the Economy, authorities introduced a structured training needs assessment and monitoring methodology to better align support instruments with SME capability gaps. The approach combines programme monitoring tools, such as beneficiary surveys, application data and performance reporting, with targeted assessments of SME needs, enabling adjustments to support measures and improved targeting of competitiveness programmes.