'Is Small Still Beautiful?'

There is once again an increased demand for interventions supporting small and medium sized enterprises (SMEs) because of the widely held believe that they provide most of the jobs. In order to answer the question whether pro SME policies are justified on factual grounds the International labour Organization (ILO) and the German Agency for International Cooperation (GIZ) came out with a new study collecting the recent empirical evidence on the job creation effects of SMEs in developing countries. The key finding is that small is still beautiful because this enterprise segment creates most of the new jobs when compared to large enterprises.

Based on reviewing almost 50 recent rigorous empirical studies on the job creation of SMEs the new publication concludes that the role of SMEs in job creation is considerable. They provide two thirds of all formal jobs in developing countries. In low income countries this share is even higher with 80%.