Policy Workshop on Entrepreneurship Indicators

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Policy Workshop on Entrepreneurship
Indicators ____________________________________ T
he SME Policy Index Methodology, data
requirements and results The case of the
Western Balkans Countries ________________________
________ Antonio Fanelli Deputy Head OECD
Investment Compact ____________
Istanbul 27 June 2007
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Content
Content

• Background and objectives of the SME Policy Index
• Methodology and application process
• The case of the Western Balkans
• How can we improve policy targeting and impact
  measurements?
• Which SME statistics are most important for
  targeting and impact measurement?

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Introduction to the OECD Investment Compact for
South East Europe
Intro to the OECD-IC

• Programme active since 2000
• Main objective assist the countries of South
  East Europe in attracting private direct
  investment
• Focus on FDI policy and SME Development
• Main activities policy reviews, monitoring and
  evaluation, policy advice and coaching
• Local partners Ministry of Economy, Investment
  Promotion Agencies, SME Development Agencies
• International partners EC, EBRD, ETF, World
  Bank, bilateral donors

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Regional Scope Southeast Europe
Intro to the OECD-IC
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The OECD IC initiatives in the SME policy area
OECD Initiatives

• 2001-2002 SME Policy Reviews (Romania, fYR
  Macedonia), conducted by the OECD IC and the EBRD
• 2003-2006 Enterprise Policy Performance
  Assessments (EPPAs).
• Scope all the SEE Stability Pact countries.
• Methodology focus group interviews
• In parallel European Charter for Small
  Enterprise reporting, led by the EC (DG
  Enterprise and Industry)
• 2006-2009 New unified process, based on the SME
  Policy Index only for the Western Balkans

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The SME Policy Index
The SME Policy Index

• The Index is a tool to monitor SME policy
  development, from policy elaboration to policy
  implementation
• It covers key policy dimensions related to SMEs,
  including the business environment,
  entrepreneurship and skill development, and
  innovation and technology
• The Index is based on a scoring system, which is
  obtained by converting qualitative indicators
  into quantitative scores

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The SME Policy Index
The SME Policy Index

• The Index was developed for the Western Balkans
  to support the implementation of the European
  Charter for Small Enterprise (the Charter),
  therefore it is based on the Charter framework,
  structured around 10 policy dimensions
• It has been designed by the OECD together with
  the European Commission, the EBRD and the ETF and
  in consultation with the Western Balkan SME
  policy Coordinators
• The Index is part of a multi-year process of
  policy dialogue and cooperation between the
  Western Balkan countries, the EC, the OECD
  Investment Compact and the other institutions
  involved in the process
• The objective is to provide a comparative,
  consistent and independent evaluation of progress
  on policy implementation on the policy dimensions
  included in the Charter, across the Western
  Balkans

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Approach
The SME Policy Index Measures Support To Small
Enterprises Along The 10 Dimensions Of The
European Charter
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SME policy cuts across a number of dimensions
Approach

• The Charter 10 policy dimensions can be divided
  in three categories
• Dimensions related to the SME operational
  environment (Dimension 2,3,6,7 and 10)
• Dimensions related to innovation and
  competitiveness (Dimension 5, 8 and 9)
• Dimensions related to human capital development
• (Dimension 1 and 4)
• The country performance is assessed against those
  three categories

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Approach
Each dimension is broken down into main
sub-dimensions Example Cheaper And Faster
Start-up
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Approach
Each sub-dimension is broken down into core
indicators Example Reduce Cost And Time For
Start-up Towards The Worlds Most Competitive
Standards
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Policy Development Steps
Approach

• Meaning of levels 1 5
• Level 1 2 Legislation is being drafted
• Level 3 Legislation adopted
• Level 4 5 Legislation is being implemented

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Dimensions ? Sub-dimensions ? Indicators
Approach

• The ten policy dimensions are disaggregated into
  28 sub-dimensions, which are composed of a
  specific set of analytical indicators in total
  there are 56 analytical indicators
• A simple weighting system is applied to
  sub-dimensions and indicators weights range from
  1 to 3 according to the importance assigned by
  experts and national co-ordinators
• However, the ten dimensions are not combined in a
  single indicator and neither are they weighted
• There is thus no one single index-score for the
  country performance

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Process
The SME Policy Index is organised to involve all
key stakeholders in the evaluation and input
process

• KEY ACTORS
• EC/OECD Core Team leads project.
• European Training Foundation (ETF) and European
  Bank for Reconstruction and Development (EBRD)
  provide inputs on their relevant Charter
  dimensions.
• ETF Dimensions 1 4 (Human Capital)
• EBRD Dimension 7 (Finance)
• The National Coordinators Team conduct a
  self-assessment based on the SME Policy Index.
• An independent assessment is conducted with the
  support of a team of consultants led by an
  international consultancy company.

National Charter Co-ordinators
EC/ OECD Core Team
Private Sector Local Consultants
ETF and EBRD contributions EC/OECD Experts
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Process
Gathering information for evaluation followed a
specific process
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Results 2007
Dimension 2 Cheaper and faster
start-up Assessment Framework
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Results 2007
Dimension 2 Results
Average
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Key Issues Dimension 2
Results 2007

• Good overall progress on company registration
• First priority systematically tackle issue of
  licences and permits
• Second priority further improve the notification
  phase and move to one-stop-shop system
• In the medium term develop electronic business
  registers

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Overall Conclusions
Results 2007

• In terms of enterprise policy development and
  Charter implementation, the Western Balkans can
  be divided into three groups
• Legal institutional framework still under
  development, average score around 2 Albania,
  BiH, UNMIK/Kosovo
• Legal institutional framework largely complete,
  beginning of implementation, score around 3 fYR
  Macedonia, Montenegro, Serbia
• Implementation well advanced, score between 3 and
  4 Croatia

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How can we improve policy targeting and impact
measurements?
Policy targeting impact measurements

• SME population is large, very diverse and its
  composition changes rapidly, even in the small
  Western Balkan countries
• In a typical transition economy, the bulk of the
  SME population is made of micro enterprises,
  family based, slow growing, but they are still
  essential for e unemployment and poverty
  reduction
• There are also a certain number of enterprises
  that are growing, are investing, are generating
  new employment and are important for the
  broadening the tax base, but they are operating
  in traditional sectors
• There are finally a small number of fast growing
  and innovative enterprises

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How can we improve policy targeting and impact
measurements?
Policy targeting impact measurements

• The first group is particularly sensitive to the
  general business environment
• The second group to specific dimensions, such as
  access to finance, tax policy, labour policy
• The last group will benefit from policy measures
  supporting innovation and skill development
• Targeting and impact evaluation are at the core
  of SME policy

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Which SME statistics are most important for
targeting and impact measurement?
SME stats

• Ideally, a business register should keep track of
  key characteristics of registered companies
  throughout their life-cycle, as much as a civil
  register does for people
• Dynamic company data combined with quantitative
  company surveys and qualitative focus group
  interviews are key tools for impact measuring
• A reliable business register should be therefore
  be the source for
• A wide range of data that can be aggregated
  whenever and however necessary
• Company surveys (i.e. full contact details, key
  information for sample selection and
  stratification)

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Which SME statistics are most important for
targeting and impact measurement?
SME stats

• SME statistics, at least in the Western Balkans,
  are generally of poor quality and incomplete,
  allowing for limited cross-country comparison
• For targeting impact measurement, reliable
  aggregated statistics are necessary (e.g.
  employment, turnover, value added contribution
  per enterprise class and sector).
• BUT most important is a reliable and regularly
  updated business register

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SME Policy Index Next Steps
Next steps

• For the Western Balkan countries we are
• Improving the indicators of the SME Policy Index
  2007
• Understanding the process of policy targeting for
  a set of specific dimensions (innovation and
  competitiveness)
• Introducing more advanced tools for policy impact
  measurement we are exploring a combination of
  company surveys and focus group interviews to
  complement quantitative and qualitative
  information
• Simultaneously we are exploring the application
  of an adapted version of the Index to other
  geographical areas (e.g. the Mediterranean/North
  Africa)

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• You can download the
• SME Policy Index 2007 Report on the
  Implementation of the European Charter for Small
  Enterprises
• from our website
• www.investmentcompact.org