Small and Medium Enterprises (SMEs) in mature and developing economies The cases of the European Union and Iran

Studies show that in both mature and developing economies, SMEs assume a crucial role in national and regional industrial development. By creating jobs and generating wealth, SMEs play their part in a broad spectrum of policies from poverty reduction and privatisation processes to helping vulnerable groups such as women and youth. Similarly SMEs have a positive impact on democratisation and the consolidation of civil society by participating in the economy, politics, and national affairs. In mature economies, the advantages demonstrated by SMEs as growth engines were fully understood by policy-makers. Over the past few decades, in expanding free market economies, they have endeavoured to gradually abolish obstacles to the development of SMEs. Despite the fact that even in developed countries some issues in relation with the development of SMEs remain, statistics show that over the last few decades gigantic steps have been taken to enhance the foundations of entrepreneurship and the growth of SMEs. In comparison, in developing countries (in particular those with a preponderant public sector) many obstacles, such as regulation, scarcity of financial resources for commercial investment and most importantly lack of overall incentive policies, have significantly slowed the rate of SME creation and development. In this regard, an analysis of the situation of SMEs in developing countries, particularly an understanding of the\nobstacles faced in their incubation, as well as a review of the experience of mature economies, can bring about constructive conclusions for the creation of mechanisms that would accelerate the expansion of SMEs in developing countries. This article will firstly focus on the role of SMEs in development and secondly on their situation in developed and developing countries. In this endeavour, the European Union and Iran have been chosen as case studies. Based on an understanding of the obstacles to SME growth and some successful experiences, recommendations regarding the removal of these obstacles will be formulated.