As a significant innovation in economic development in its own right, the Marshall Plan to rebuild postwar Europe and its 60th anniversary offers an opportunity to look at the role and progress of small- and medium-sized enterprises (SMEs) and what innovations are being used to jump-start this powerhouse of economic development.
Affordable capital for SME's is a critical part of successful economic development. SMEs represent the dominant form of business organization worldwide, accounting for roughly 95 percent to 99 percent of enterprises depending on the country. Yet despite historical highs in micro financing, SMEs remain underserved by financial markets in developing countries. This "missing middle," seen in most of the developing world's industrial structure which has many small, static, and informal businesses and a few large firms, is often the absent fertile ground for new products, services and business models that can not only create change and growth in a given industry, but can help launch new ones.
While the SME landscape may differ across countries, and there continues to be debate regarding the differences of redundant SMES and the degree of entrepreneurial culture that exists in markets, it remains that the organic growth of small enterprises is a critical source of wealth creation.
This paper represents the discussion and innovative ideas captured during the German Marshall Fund of the United States' Affordable Capital for SMEs Conference held in Paris on June 11-12. It examines the need for collaboration, models for filling the financial service gap between microfinance and commercial finance, looks at barriers to generating affordable capital and much more.