Objectives and strategies

SME’s role in the development process is reflected in the objectives of the development policies designed for these companies. In this regard, there are differences among countries in the region resulting from the potential role each country gives SMEs and the underlying conceptual framework.

While having numerous objectives for policies and initiatives to support SMEs should not pose a problem per se, in practice it requires an institutional capacity and a coherence among political instruments that are sometimes lacking in Latin America.

While it is true that the number of objectives associated with support policies and initiatives has gradually been cut down over the last two decades, there is still a plethora of objectives, which in many cases are unjustified. In theory, policies to support SMEs are geared toward creating jobs, increasing exports, triggering productivity gains, improving innovation capacity and competitiveness, fostering the development of human capital and reducing market failures. In some countries in the region, promoting regional development is another objective. These objectives are not sought in all countries at the same time. Some countries adopt three or four objectives, such as in Ecuador and Colombia (Burneo and Grijalva, 2010; Zuleta, 2011). But some countries set as many as six or more objectives at the same time, such as Brazil, Chile, El Salvador and Mexico (Belmar and Maggi, 2010; Pessoa de Matos and Arrojo, 2011; Cabal, 2010; Brown and Domínguez, 2010). While taking on numerous objectives should not pose a problem per se, in practice it requires an institutional capacity and coherence among political instruments that are sometimes lacking in Latin America. 

Another problem with multiple objectives is prioritising them. Some institutions responsible for designing and implementing policies still have difficulties with prioritising their objectives. Creating jobs and improving competitiveness usually figure among the essential objectives. But improving competitiveness is only sometimes defined as a clear, unequivocal goal. Sometimes the quest for greater inclusion of SMEs in national and international markets (substituting imports) is cited as one of the objectives. The potential for SMEs to actively take part in developing the economy as a whole is considered explicitly and implicitly. In other cases, improving competitiveness is synonymous with strengthening SMEs to “survive” in contexts in which domestic markets are fully open (Kulfas and Goldstein, 2011).