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Journal of Diplomacy and International Relations

Abstract

The current economic setting in most Latin American countries suggests that, if the small and medium enterprise (SME) sector does not perform well during the next couple of decades, overall economic performance will also be unsatisfactory, especially in the areas of employment creation and income distribution. No other major sector has the potential to generate a large amount of adequate-income jobs. Experience of other countries has proven that this sector can play a central contributing role, under proper conditions and with adequate support. Various types of evidence from the countries of the region suggest that considerable potential is present in their SME sectors. But both experience elsewhere, and economic logic, imply that a strong and coherent support system will be necessary if that potential is to be reasonably fulfilled. Such a system has been notoriously absent in most Latin American countries in the past. Countries which fail to rectify this lack may suffer serious social and economic consequences. The parallels between the economies of many Latin American countries and various others around the developing world (e.g. South Africa, Philippines), both in economic structure, recent growth performance and level of inequality, suggest that many of the conclusions applicable to Latin America are relevant elsewhere as well.

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