By Lamia Kamal-Chaoui, Director, Centre for Entrepreneurship, SMEs and Local Development
A universal definition of small – and medium-sized enterprises (SMEs) does not exist. What is generally undisputed, however, is the fact that the overwhelming majority of private-sector businesses in the world are SMEs and that SMEs account for a very large share of world economic activity in both developed and developing countries.
Look at the data. In the OECD countries where SME definitions are comparable, the contribution of SMEs to national employment ranges between 53% in the United Kingdom to 86% in Greece. The contribution of SMEs to national value-added 1 is between 38% in Mexico and 75% in Estonia. The SME share of economic activity is typically larger in OECD economies than in emerging-market economies, reflecting a mix of stronger SME productivity levels in the former and higher rates of economic informality in the latter. In emerging-market economies, SMEs are responsible for up to 45% of jobs and up to 33% of national GDP. These numbers are significantly higher when informal businesses, which are often more than half of the total enterprise population, are included in the count. Some estimates suggest that when the informal sector is included, SMEs in emerging-market economies account for 90% of total employment.