IDB working to strengthen SMEs

The private sector must work to strengthen inter-firm collaboration, reduce costs, maintain employment, and lay the groundwork for strategies of diversification, innovation, and value-added exports in the medium term.
This is according to a study undertaken by the Inter-American Development Bank (IDB) on the strengthening of the small and medium enterprises (SMEs) sector.
The study showed that the public sector can help SMEs integrate more fully and competitively into global production processes through several means.

These include providing investment and trade information, the establishment and enforcement of quality standards that are consistent with global practices and training SMEs in such standards, encouraging business development services that help SMEs access global production networks, and facilitating the training and capacity building of SMEs.
According to the study, the government needs to uncover new ways that are feasible, as well as identify and encourage people to come up with such initiatives. It stated that the government also needs to discover what public inputs required to support the private sector are missing.
Need for strong public-private dialogue
The IDB report mentioned too that the level of detailed information required is very high.
In order for government to get access to this information and encourage the private sector to engage in pre-investment activities such as call centres, medical services, and clinical trials, as well as identify problems and their solutions, there is a need for strong public-private dialogue.
The study found that in an effort to enhance private sector development (PSD) and increase the impact of PSD projects, a comprehensive programme is needed to link business climate reforms to cluster development initiatives and to make improvements at the firm-level.
Detailing the role of government and the private sector, the study related that without a strategy to foster private sector development, increase competitiveness, and attract foreign investment, sustained economic growth will not be achieved.
It added that governments need to play an active role in this process by supporting innovative mechanisms to attract investments to improve infrastructure that foster a business climate that encourages and rewards entrepreneurship, offering transparent laws and regulations that facilitate business development, access to finance and a stable macroeconomic environment. Concerning the cost of doing business for SMEs, the study proved that there is a multiplicity of policies, agencies, and instruments that produce overlapping efforts, confusion, inflexibility, and inefficiencies.
The study went on to mention that poor access and high transaction costs for users, due to the excessive range of separate channels for requesting support, and lack of institutional capacity make the mechanisms available less transparent and less user-friendly.