Abstract

Peru has one of the largest and most dynamic small- and micro-enterprise (SME) sectors in Latin America. It represents 99% of all enterprises in the country, 78% of total employment and 42% of gross domestic product (GDP). However, changes in the macroeconomic environment, due mainly to trade liberalization, have created new challenges to the SME sector and raised questions as to the adequacy of the existing network of programs and policies to support it. This project will examine the effects of globalization on SMEs, provide an overview of the programs and policies currently in place to serve the SME sector, assess the relevance of these programs and policies in the light of the new macroeconomic framework; and make recommendations for improving existing programs. The overall hypotheses is that the new macroeconomic conditions demand changes in framework policies for the SME sector, improvements in existing programs of financial and non-financial support, and efforts by firms to overcome their isolation by developing vertical and horizontal linkages with other firms. The research is sponsored by an informal working group of SME promotion agencies that brings together key institutions from government, nongovernmental organizations (NGOs) and the private sector.

Post-Project Summary

The project proceeded in three stages. The first consisted of in-depth interviews with union leaders, managers, bureaucrats and other researchers working on similar themes. This allowed the project team to refine the hypothesis and design a questionnaire for the survey. During the second stage, the research team used the questionnaire in a survey of small and medium enterprises (SMEs) in the garment manufacturing and metal-mechanical industries in five cities (Arequipa, Huancayo, Juliaca, Metropolitan Lima and Trujillo), and in the information services sector in Lima. In all, they interviewed 252 SMEs in the garment industry, 287 SMEs in the metal-mechanical industry and 115 SMEs in information services. Of the last, 70 were cyber-cafés (public Internet access), 30 were computer assemblers and 15 were software developers. In the third stage, the researchers validated the results and the typologies developed through additional meetings, presentations and interviews with businesspeople, union leaders, academics and representatives of nongovernmental organizations (NGOs). Some of the individuals consulted, along with their organizational affiliation, are given in the final report. A synthesis of the survey findings is presented in the final report under the following headings: sectoral analysis; competencies, clients and providers; SME development services; legal-institutional status; typology of SMEs by sector; characteristics of workers; entrepreneurial capacity (characteristics of owners); agglomeration in SMEs; subcontracting and interaction with other firms; social capital and SMEs; empiric evidence of the determinants of SME performance (entrepreneur's level of education was the most compelling); and elements to consider in forming policies relevant to SMEs. The findings were disseminated at meetings with SME-support institutions, the public, academics, bureaucrats and representatives of NGOs involved in sector.

Recipient Institution(s)