The role of small and medium-sized enterprises in development: What can be learned from the German experience?

Arbeitspapier

Small and medium-sized enterprises (SMEs) play an important role for development. Of importance are Schumpeterian SMEs, which include start-ups that trigger innovation, boost productivity and bring about structural change. Normal SMEs, which only adjust to market pressure, are also important for development and employment. Germany is a role model for SMEs. This is due to several important factors: Germany's local banking system, which is not profit oriented (made up of Sparkassen, or savings banks); the dual vocational system, with its combination of practical and theoretical education; the high social capital of strong employers' associations and trade unions; government support of SME clusters and a big, government-owned development bank (the KfW). SMEs in developing countries typically suffer from limited access to long-term and affordable finance, insufficient institutions for developing a skilled class of entrepreneurs and workers, a low income, and poor policies to support economic and social upgrading of SMEs. Economic upgrading in developing countries is necessary, but it will not be successful without social upgrading. Germany - with its high social capital within the framework of a social market economy, its financial and education system, and its government support for SMEs - can stimulate debates about SMEs in developing countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Global Labour University Working Paper ; No. 53

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Herr, Hansjörg ; Nettekoven, Zeynep Mualla
• Event: Veröffentlichung
• (who): International Labour Organization (ILO)
• (where): Geneva
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/189840
• Last update: 10.03.2025, 11:41 AM CET