Tuesday, June 3, 2008

SMEs - interventions in developing countries

In my literature review doen as part of my research, a pattern developed for developing countries separate to developed countries. Developed countries attempted to use more functional interventions which brought their economy closer to a "perfect" or unbiased economy. Developing countries also used functional interventions, but used selective interventions more often. These selective interventions could be perceived as being necessary to correct previous interventions that have skewed their economy.

However, a disconcerting component of these interventions is that none of the interventions are documented nor researched afterwards to measure actual success, in order to allow for extrapolations and future utilisation of the more successful interventions. Interviewing a senior South African government researcher on business matters, he acknowledged that much the same occurred in South Africa.One has to query whether these developing countries are really serious about improving the lot of the bulk of citizens, or whether their SME interventions, which normally focus on micro business, are not simply a gesture and a sop to the poor, in order to retain votes at what is in effect a low cost.

Very few developing countries appear to invest in selective interventions to assist the existing formal sector SME's, whose growth is most likely to grow the job base.A good example of a country who did it correctly appears to be South Korea, who have invested heavily in the formal sector, and compare them to other countries who were "developing" at the same time. I say appears, as I have not formally researched this viewpoint. Africa in particular needs to wake up and look for positive models elsewhere, even among those countries they like the least, as there are lessons to be learned out there!

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