SMEs and Entrepreneurship in Mexico

Small and medium-sized enterprises (SME s) account for a large share of employment in Mexico, but their contribution to value-added remains limited. The framework conditions for SME s and entrepreneurship have improved in recent years, thanks to reforms such as regulatory simplification, expansion of the national loan guarantee programme, and the integration of the micro enterprise sector into the public business support system. Nonetheless, administrative burdens on start-ups remain high, and SMEs still face restricted access to credit and limited new opportunities in innovative sectors. More needs to be done to reduce informality, improve access of SME s to financing, and generate greater numbers of mediumsized companies able to innovate and become international businesses. Despite recent increases in budgets, the reach of many public programmes remains small compared to the target population of SME s, particularly with respect to micro enterprises and innovative SME s and start-ups. It is encouraging that the new administration has put strong priority in supporting the entrepreneur sector as reflected by the announcement in its first week of the forthcoming creation of the Institute of the Entrepreneur and significant reforms to the SME fund. These reforms should be oriented, besides increasing the size of the Fund, to strengthening the capacities of intermediary organisations providing business support services on behalf of the government and simplifying its operating rules and procedures.