SMEs, local economic development

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SMEs, local economic development regional policy

• 1. Definitions characteristics
• 2. SMEs local economic development
• 3. SMEs government policy

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1. Definitions characteristics

• DTI definitions
• a small firm is an independent business,
  managed by its owner or part-owners and having a
  small market share. (Bolton Committee, 1971)
• Statistical definitions
• A) Employees
• Micro firm 0-9 employees
• Small firm 10-49
• Medium firm 50-249
• Large firm 250
• B) Turnover lt 2.8m (7m euros) balance sheet lt
  1.4m (5m euros) or lt50 employees

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1. Characteristics of SMEs

• A) Number , employment turnover
• B) Industrial distribution
• C) SMEs the business cycle
• D) The spatial distribution of SMEs

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2. SMEs local economic development

• A) Factors influencing the growth of SMEs
• 1. Recession
• 2. Re-structuring of large firms
• 3. New technology helpful to small firms
• 4. Changes in consumption patterns
• 5. Break-up of state monopolies
• 6. Change of attitudes to SMEs
• 7. Government policy to SMEs

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2. SMEs local economic development

• B) The impact of SMEs
• 1. Job generation
• 2. The turbulence of the sector
• 3. Low quality jobs
• 4. SMEs growth
• 5. Indigenous development

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3. SMEs Government Policy

• 1. Enterprise Fund
• Public-private partnership
• Rationale behind policy
• Young, fast-growing SMEs negative cash flows
• Need to invest in products, facilities,
  equipment, etc.
• Banks reluctant to lend
• Venture capital is more appropriate
• Policy objectives
• Stimulate start-ups growth
• Focus on the equity gap (lt05m investment)
• Provide finance at a regional level
• Promote private sector venture capital

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3. SMEs Government Policy

• Problems with the policy
• 1. Lack of experts to help SMEs
• 2. Fund is too small
• 3. Real equity gap 0.25-1m
• 4. Displacement effects