Fostering Export Capacity of Small and Medium Enterprises (SMEs) in Latin America and the Caribbean

The fall of large, multinational corporations in the Great Recession signaled to the international community two critical takeaways: (1) communities should consider the value in ‘thinking smaller’ -- growth should come from the bottom up, not top bottom and more importantly, (2) balanced regional integration can prove to be a formidable stronghold against external shocks to economic development. The Inter-American Development Bank (IDB) recognized that the 26 member countries in the LAC region can largely benefit from holistic economic investment and integration and has accordingly honed in on the capacity of small and medium-sized enterprises (SMEs), which constitute a large portion of the economic activity in the region, to internationalize. To this end, the IADB built ConnectAmericas, a digital platform by which SMEs, IDB experts and business professionals can transfer knowledge, develop technical skills and discuss business connections. This partnership between the SIPA Capstone consultancy team and the IADB materialized out of the recognition that a major impediment to SME internationalization is their inability to participate in global value chains (GVC). The Capstone team not only researched the opportunities and constraints that SMEs encounter when participating in GVC, but also expanded the IDB SME MiPYME+ tool. The final report commences by (1) providing a brief background of the current macroeconomic conditions in the region, (2) analyzing the major trends concerning GVC and (3) discussing five case studies of successful and unsuccessful SMEs.