In most of Latin America, small, and medium enterprises (SMEs) dominate the economy and the private sector. SMEs are also major providers of jobs in these economies because they frequently operate in labor-intensive sectors. Improving the performance of SMEs and increasing their participation in local and global markets can have enormous and positive economy-wide consequences. For example, the opportunity to increase productivity and access new technology, among other improvements, can increase employment, raise incomes, and reduce poverty.
Also, SMEs can act as breeding grounds for entrepreneurial skills and innovative ideas. Furthermore, experiences elsewhere show that interventions can be effective in stimulating growth and productivity of SMEs, justifying a policy focus on SMEs.
In Guatemala, the contribution of the SME sector to Gross Domestic Product (GDP) and employment are substantial. The Guatemala federation of SME estimates that SMEs contribute 40 percent of GDP and 85 percent of employment (2009).