Preserving growth patterns and creating more quality jobs are very much needed in a global economy dealing with the aftermath of support packages implemented to face the pandemic and the events unfold for the renew trend to fight turf wars.
The return of inflation, the decoupling of global value chains and the disruption in global production networks, the food and energy crisis have turned upside down, in a few months, the trends that have organized the international economy in recent decades
Meanwhile, technological changes of great disruptive power do not stop, and continue to shake well-established business models and challenge traditional assumptions about consumption, resources, labor, capital and competition.
Would it be too ambitious to propose that the G7 and G20 leaders create a global compact for SME and entrepreneurship development?
Talking about major macroeconomic trends we leave aside quite often ley issues for local economies. SMEs are the backbone of the entrepreneurial community.
Unless we try something like a Global Compact for SEMs, insufficient results in quality growth and job creation will persist. The SME policy toolbox needs to be consolidated, renewed and upgraded. The global economy is changing fast. Again
A global compact for SMEs and entrepreneurship development could help unleash entrepreneurial spirit and the potential of SMEs in a global economy facing a challenging context. Chances to face an “atlantic” recession (if not global) in the next eighteen months are not low.
While its detailed framework deserves proper thinking, past policy practice suggests a focus on limited and workable priorities to target common SMEs hurdles, for example:
■ Access to capital to complement traditional bank lending with instruments to strengthen asset-based finance among SMEs, including alternative debt mechanisms (corporate bonds, securitised debt, covered bonds), hybrid instruments (combining debt and equity), public SME equity markets and crowdfunding.
■ Access to international markets and knowledge flows. This could be achieved by working on global value chains and global production networks to create basic standards and disseminate knowledge for SMEs, enabling them to acquire the skills needed to participate more actively in the global economy.
■ Access to global and local innovation networks, public research and procurement opportunities to stimulate collaboration among universities, research laboratories and SMEs, such as environmentally sound technologies, new materials and other technologies related to climate protection.
■ Improved management skills, including risk assessment, strategic thinking, networking, decision-making, information processing and other similar skills through SMEs and entrepreneurship educational programmes.
Firm age and size are important. Young innovative firms are net job creators (although they could have limited weight in the economy). Teaching SMEs how
to handle intangible assets and intellectual capital could also provide opportunities for new firms and create new jobs. A special SME section in multilateral trade agreements (as tried in the latest versions of the same) could also be promoted.
Adding a local dimension and working at city or district level could also be significant. A global database of instruments’ performance information and best practices could be of great help.
Government and business leaders must prepare for a very different reality. New approaches are needed even for well-known challenges, especially if we want to create jobs for inclusive, quality growth.
