This study is to provide the Governmentof Chile with a review of the portfolio of small and mediumenterprise (SMEs) development programs and the institutionsthat provide them, leading to recommendations to improve theeffectiveness of a streamlined portfolio. This emphasis isimportant for economic reasons, given the sectors role inemployment, and the possibility of improving its integrationinto the national economy and export-oriented production andmarketing chains. However, this analysis also identifiesareas where SMEs can more effectively leverage governmentprograms to become more productive, efficient, andinnovative. The analysis is based on interviews with keypolicymakers, managers and other staff of the governmentinstitutions responsible for most of the programs secondaryreports, and discussions with small business managers,business association leaders, academicians and financialintermediaries. The report is organized as follows: Thefirst chapter reviews the evolution of the macroeconomic andbusiness environment in Chile, and provides the theoreticalarguments upon which the governments intervention in favorof SMEs has been based; second chapter examines thecharacteristics of the SME sector, as well as keydeterminants of SME productivity and growth; third chapterdescribes the obstacles to SME development, such asconstraints to financial resources; fourth chapterrecommends a streamlined portfolio of private sectorassistance projects and provides an institutional analysisof Production Development Corporation (Corporacion deFomento de la Produccion) (CORFO), Agricultural DevelopmentInstitute (Instituto de Desarrollo Agropecuario) (INDAP) andTechnical Cooperation Service of Chile (Servicio deCooperacion Tecnica de Chile) (SERCOTEC); fifth chapterfocuses on programs that promote innovation, technology andnetworks, and finally sixth chapter offers strategic andoperational recommendations to improve the effectiveness ofthe Governments investment in SME programs.
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