How far do SME’s make a difference in the European Economy? The European Commission’s Report in 2014 stated that 21.6 million SMEs were functioning in the non‐ financial business sector. These SME’s employed as many as 88.8 million people.
From the point of economics, there is a revenue generation of a whopping €3,666 trillion in value. In Europe, 99 out of every 100 businesses are Small Medium Enterprises and employ as many as 2 out of 3 employees. The long-term success of SME’s depend on innovation and the ability to remain competitive.
In E.U., SMEs have increased using their monetary resources by only 20% since the last decade – considered low by experts. With opening up of the world economy, enterprises face intense competition at global level. The challenges include offering quality products ad services at a lower cost, and bringing in innovation. There is a need to offer higher quality products with investment in R&D. SMEs that are successful today are enterprises with better technologies and effective marketing techniques.
Strengthening SME Competitiveness
Competitiveness enables firms to use resources effectively, and invest in innovation while improving technology. Competitiveness is measured by how efficient and effective the prevailing markets for products, labor and capital are. In order to strengthen SMEs, European Countries need to focus on employment creation, business growth and support technology-based business while supporting newer business. SME development strategies are country-specific because the availability of resources may vary.
Reforms in SME Development Lessons
Good policies come in clusters. SME development strategies can lead to poverty reduction and solve the unemployment problems. Here are some ways European Nations can improve SME’s:
- Foreign investment has a direct relation to the economic stability and peace in the country.
- SMEs can develop more if there are sound macroeconomic policies implemented by the government.
- The partnership between the public sector, private sector and cooperative society can help economies to attract more investments and focus on a wide variety of projects.
- Investments in infrastructure and access of SMEs to local, national, regional and global markets leads to overall economic development.
MED plans for programs and makes strategies with additional and specific guidance to mainstream the process of SME development.