Remarks By Arancha González at the Gala Dinner of the Global Trade Development Week 2015

27 October 2015
ITC News
Remarks By Arancha González Executive Director International Trade Centre at the Gala Dinner of the Global Trade Development Week 2015
27 October 2015 - Dubai, UAE

Your Excellency, Undersecretary Abdullah Al Saleh,
Distinguished guests,
Ladies and Gentlemen,

The Global Trade and Development Week is a powerful forum to learn from each other, and I would like to thank the hosts and organizers for this initiative.

I would like to start this short intervention by flagging three elements that in my view are shaping today's economy.

The first is the increasing openness. Barriers to trade and investKent are being gradually addressed and this is creating new opportunities. More and more these opportunities are in the South.

The second element is the dynamic nature of our economies, characterized by higher levels of technology and constant innovation. I just arrived from Abu Dhabi who was hosting the WEF Global Agenda Council and whose theme was the Fourth Industrial Revolution.

The third realization that tapping into these opportunities will require turning our attention to SMEs, They make up the bulk of the economic tissue of most countries. Here in Dubai, SMEs represent 95% of all registered firms, 42% of the workforce and 40% of the Emirates GDP. Investing in SMEs is a long-term and smart strategy, with sustainable and inclusive returns that multiply across societies, regions, and countries.

For SMEs to compete and thrive they need what we call three "Cs".

SMEs need to be constantly connected to sources of market information in order to understand the forces of demand and supply and to assess whether they are shifting. This knowledge is fundamental for designing an offering that is well-suited to targeted market segments and suitable to compete in international markets at a given moment in time. This knowledge is also fundamental to adjust and change the firm’s offering in the light of changes in the market. The ability to adjust to and ideally to pre-empt change is crucial in dynamic fast-moving markets.

It is within this context that I am pleased to be introducing, a new ITC flagship publication that produces critical findings that can help SMEs to develop further and to better compete in a global market: the “SME Competitiveness Outlook 2015”.

By looking at both firm and country-level data in an innovative way, the ITC SME Competitiveness Outlook 2015 provides practical guidance on how to strengthen the role of SMEs in your respective economies.

In this first edition you will also find 25 detailed country profiles - which we will expand to include even more countries in future editions of the publication. Each country profile is accompanied by a visualization chart – we call it the ‘SME competitiveness grid’ – which guides readers through the key factors – at the firm level, in the immediate business environment, and in the macro environment – which affect SMEs’ ability to Connect, Compete and Change. The country profiles therefore provide a wealth of SME specific information necessary to assess how countries’ SMEs position themselves with respect to regional and global markets.

The report produces some critical findings in terms of what can help SMEs develop further and compete in a global market. Tonight, I would like to take a few moments to briefly give a taste of the breadth, depth and diversity of interesting findings that you can expect from the report:-

• Firms connected to international markets are more productive and create more employment. For example, in Tunisia being connected to international markets boosts firm productivity almost 2.5 times and profitability increases threefold.

• Increased SME productivity typically leads to higher wages and better working conditions.

• We also found that the competitiveness gap between small and large firms is significantly bigger in poor countries than in large countries.

• In least-developed countries the largest performance gap between small and large firms is in connectivity, defined in our report as the capacity to use digital or e-connectivity to reach out to consumers and suppliers.

• Land-locked developed countries also perform particularly poorly in e-connectivity. These countries therefore face a double challenge of lacking connectivity through physical infrastructure and lacking e-connectivity.

• Access to finance is found to be the largest impediment to firms’ capacity to compete and change in LDCs.

When analysing the SME competitiveness grid across geographical regions we found that:

• Medium-sized firms in Europe and Latin America are better prepared than in other regions.

• Latin American SMEs are strong entrepreneurial performers, outperforming developing country average along all three pillars of competitiveness.

• South Asian SMEs face particular challenges when it comes to meeting quality requirements.

In closing, I would like to underscore the importance of SME Competitiveness in fuelling global trade and that is paramount that we better understand how we can contribute to a better enabling environment for SMEs to thrive and compete at a global level.

It is therefore encouraging to see more attention being given to SMEs in important fora such as the G-20, recent trade agreements such as the TPP, the recently launched EU Trade Strategy as well as the UN Global Goals. I hope this report will serve as an important contribution to this collective effort and am confident that it will provide a useful contribution to your debates this week as well as to your decision-making back home.

We have made some copies of the publication available at this event, both in English and Arabic, and you can also download it directly from our website at www.intracen.org.

Thank you.