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Helping Smaller Firms Thrive and Grow with Trade Policies

Helping Smaller Firms Thrive and Grow with Trade Policies

Policymakers should not assume that MSME firms will always stay MSMEs.  Yet frameworks in many economies seem designed to trap smaller firms into a set category and entrench them into a “small” mindset. There will always be MSME firms.  They form the backbone of most economies, as much as 97 percent of companies across Asia, employing the overwhelming share of workers.  The goal of MSME policies should be enabling the current crop of smaller firms to grow, allowing firms in the “medium” category to reach large scale in relatively short order, while encouraging new entrants to the MSME ranks. Trade policy is one tool to help MSMEs grow.  In most economies, the domestic market alone can be too small or even too competitive for success.  E-commerce and digital technology, however, have allowed MSMEs to reach regional or global audiences.