Small and medium-sized enterprises (SMEs) are the backbone of economies around the world. Only the most productive and dynamic SMEs engage in international trade, and even fewer invest in physical assets abroad. Cross-border investment by SMEs accounts for less than 10% of global FDI. Internationalization can be an important strategy for the survival, growth, and long-term viability of SMEs. However, the uncertainties and resource demands associated with foreign investments hinder their international growth. In addition, investment incentives, investment promotion agencies (IPAs) and special economic zone (SEZ) operators are often designed to attract large, employment-generating industrial investment, rather than SMEs.
The current global investment landscape sees the convergence of several megatrends including digitalization, the increasing importance of regional value chains, and lackluster growth of large-scale manufacturing investment. Each of these trends puts the lack of focus of investment promoters on SMEs in a new light. It calls for an improved understanding of the unique challenges faced by SMEs in their internationalization processes.
This session will bring together policymakers, business leaders and representatives from international organizations to explore the challenges and opportunities associated with the internationalization of SMEs. The panel will discuss how to reduce the common investment policy bias in home and host countries towards large MNEs, the role of SMEs in South-South and intra-regional FDI, and ways and means to maximize the development impact of SME-FDI.
- What are the key differences in the internationalization processes of SMEs versus larger enterprises?
- What are the specific challenges that SME investors face in foreign markets?
- What policies and policy instruments are most effective in promoting and facilitating FDI by SMEs?