Answer:
Explanation:
SMEs (small and medium-sized enterprises) account for 60 to 70 per cent of jobs in most OECD
countries, with a particularly large share in Italy and Japan, and a relatively smaller share in the United
States. Throughout they also account for a disproportionately large share of new jobs, especially in those
countries which have displayed a strong employment record, including the United States and the
Netherlands. Some evidence points also to the importance of age, rather than size, in job creation: young
firms generate more than their share of employment. However, less than one-half of start-ups survive for
more than five years and only a fraction develop into the high-growth firms which make important
contributions to job creation. High job turnover poses problems for employment security; and small
establishments are often exempt from giving notice to their employees. Small firms also tend to invest
less in training and rely relatively more on external recruitment for raising competence.
The demand for reliable, relevant and internationally comparable data on SMEs is on the rise, and
statistical offices have started to expand their collection and publication of data. International
comparability is still weak, however, due to divergent size-class definitions and sector classifications. To
enable useful policy analysis, OECD governments need to improve their build-up of data, without creating
additional obstacles for firms through the burden of excessive paper work.
Problems confronted by SMEs
The greater variance in profitability, survival and growth of SMEs compared to larger firms
accounts for special problems in financing. SMEs generally tend to be confronted with higher interest
rates, as well as credit rationing due to shortage of collateral. The issues that arise in financing differ
considerably between existing and new firms, as well as between those which grow slowly and those that
grow rapidly. The expansion of private equity markets, including informal markets, has greatly improved
the access to venture capital for start-ups and SMEs, but considerable differences remain among countries.
Regulatory burdens remain a major obstacle for SMEs as these firms tend to be poorly equipped
to deal with the problems arising from regulations. Access to information about regulations should be
made available to SMEs at minimum cost. Policy makers must ensure that the compliance procedures
associated with, e.g. R&D and new technologies, are not unnecessarily costly, complex or lengthy.
Transparency is of particular importance to SMEs, and informat
