Small and Medium Enterprises, Job Creation, and Sustainability: Maximizing Opportunities from South America's Commodities Boom

After decades of low growth, South America has experienced an economic boom. But the reliance on commodity exports has led to growing concerns about how to move to a more economically, environmentally, and socially sustainable development path. Revenues generated by high growth have enabled social policies to address the inequalities that characterize the region. However, opportunities to address structural issues and invest in diversification, job creation, human capital, and green production and technologies will only materialize if the boom is well-managed.

This project will examine the potential of small and medium enterprises (SMEs) in the move to a more inclusive and sustainable development path. In the region, 90% of businesses are SMEs. They employ more than 65% of workers, with women often over-represented in smaller firms. These smaller firms contribute little to gross domestic product and exports, and they tend to be in a relatively weak position to take advantage of new forms of production and technologies.

The research team will analyze the extent to which SMEs are integrated into commodity value chains as direct exporters or suppliers of inputs and services, and can take advantage of the commodities boom. They will examine how current growth patterns are influencing SME development, job creation, and the demand for skills in the context of growing interest in green economies.

Researchers will break down the data according to gender to examine the differences between men and women. The project will promote interaction between researchers, governments, and the private sector. The research team will produce an annual flagship report. It will include contributions selected primarily through competitive calls, and respond to policy interests identified through stakeholder consultations and round tables.

The Mercosur Economic Research Network (MercoNet), which includes 13 high quality research institutions, will coordinate the project. The project will also:
- involve young economists in MercoNet research projects;
- offer a Young Economist Award with dedicated mentoring and support from senior researchers;
- promote sharing of research results;
- include multistakeholder consultations and policy dialogues involving policymakers, the private sector, and academia; and
- support MercoNet's expansion and its consolidation into the South American Network on Applied Economics.