The recent McKinsey Global Institute report A microscope on small businesses: Spotting opportunities to boost productivity estimated that micro-, small, and medium-size enterprises (MSMEs) account for two-thirds of business employment in advanced economies— and almost four-fifths in emerging economies—as well as half of all value added.1

In this research, MGI aggregated a richly granular data set of MSMEs and large companies across 12 broad sectors, 68 level-two subsectors, and more than 200 level-three subsectors for 16 countries that account for more than half of global GDP.

In these countries, MSMEs on average have only half the productivity of large companies, and less than that in emerging economies. Raising MSMEs to top-quartile levels relative to large companies is equivalent to 5 percent of GDP in advanced economies and 10 percent in emerging economies.

The visual presentations that follow summarize the findings for the 16 countries in our research representing different income levels. In this group (listed by per capita GDP in 2021 in purchasing power parity terms) are ten advanced economies: the United States, Germany, Australia, the United Kingdom, Italy, Israel, Japan, Spain, Poland, and Portugal; and six emerging economies: Mexico, Brazil, Indonesia, India, Nigeria, and Kenya.2

MSME performance varies significantly among countries—and sectors and subsectors within countries. Their economic contribution in terms of jobs and value added ranges widely, as does their contribution to economic dynamism. So does their productivity relative to large companies, and the potential to add value from narrowing those gaps.

Only a fine-grained view down to the subsector level reveals a full picture of MSME productivity and informs how best to raise it and capture value. Based on that deep intelligence, businesses and policy makers can effectively prioritize and tailor approaches, and those approaches, too, can differ from country to country.

This report was produced by McKinsey Global Institute, specialist provider of a fact base to aid decision making on the economic and business issues most critical to the world’s companies and policy leaders.