1. Small and medium-sized enterprises (SMEs) are the growth engine of many economies, but it can be a challenge for them to expand internationally and integrate into global value chains.
2. SMEs account for around 99% of companies and 70% of all jobs in OECD countries, and they contribute more than 50% of gross domestic product in high-income countries worldwide, according to a 2022 McKinsey report titled Beyond financials: Helping small and medium-sized enterprises thrive.
3. UN research from 2022 on the effect of the fourth industrial revolution on SMEs finds that major barriers to international expansion include an inability to benefit from economies of scale as easily, greater difficulty in accessing financial resources, and a higher likelihood of being burdened by bureaucracy and poor infrastructure.
4. The pandemic hit SMEs hard, setting back export growth. In mid-2020, McKinsey analysis found that 45% of small businesses were facing supply chain disruptions, which hindered their ability to export products and integrate into global value chains.
5. Advanced technologies such as artificial intelligence, data analytics, blockchain and automation are crucial in helping SMEs grow, ultimately claiming space in global value chains and further bolstering the economies of their host countries. However, the adoption of such advanced technologies often requires substantial financial investment and expertise, posing a challenge for SMEs with limited resources. Recognising this barrier, government support becomes paramount in facilitating SMEs’ access to these transformative technologies. Through funding initiatives, training programmes and strategic partnerships, governments can empower SMEs to harness the benefits of cutting-edge tools, fostering innovation and propelling international expansion.
6. Using South Korea as a case study, the UN research shows that compared with large companies, the South Korean SMEs that adopted Industry 4.0 technologies such as digital tools were more likely to invest and expand overseas.