Financing sustainable growth for SMEs globally: The case for a coordinated G20 policy approach
The global economy continues to perform below potential and suffer from significant uncertainty. Despite G20 leaders committing, in 2014, to measures aimed at raising GDP by 2% by 2018 a lack of structural reform and serious constraints for financing along Global Value Chains (GVCs) continue to drag on growth.
Meeting the G20’s 2% growth scenario by 2018 requires the rapid implementation of strong and well targeted measures to encourage entrepreneurship and private sector led growth. This is particularly true for small and medium-sized enterprises (SMEs) whose participation in GVCs fundamentally supports growth in our economies, while also enhancing their own productivity and innovative potential.
Poorly designed, or implemented, regulation creates significant barriers to market and can have unintended consequences. This is evident in, but not limited to, the financial sector, where necessary regulatory change has often led to unintended consequences such as reduced flows of finance to some sectors and to SMEs. The response to these challenges must be consistent across borders and the need for greater international co-operation and good global governance is clear.
To promote a better understanding of these interactions, Business at OECD and the B20 launched a focused dialog with stakeholders, including B20 Taskforces, SME associations, governments, financial institutions, business and international organisations. The primary goal was to identify G20 priorities for enhancing finance for growth. Participants examined links and common denominators across all B20 recommendations to develop a holistic understanding of finance for growth, and in particular of SMEs and their markets. The conclusions informed actions by G20 leaders at their 2015 Antalya and 2016 Hangzhou Summits.
We are now progressing our work under the German Presidency with a third edition of this dialog on 22 March 2017 at the OECD. This publication leverages the insights of previous editions and covers topics including digitalization, cyber security, innovation, financial inclusion, green finance and financial regulation. Coordinated G20 action in these areas is essential to support the financing of SMEs in global markets thereby fuelling investment and growth.