Trade and investment policies

Creating new business (and, therefore, investment) opportunities in the regional and global markets is another crucial challenge facing MSMEs in Asia-Pacific. In small economies with a limited domestic market, exports stimulate economic growth and rapid socioeconomic transformation. MSMEs supplying competitive products and services with more significant potential for backward and forward linkages could contribute substantially to exports and, hence, to higher national income and overall socioeconomic progress. Therefore, the development of export-led MSMEs should be an essential part of any national economic development strategy. In this context, internationalization enhances competitiveness, reinforces growth, and supports MSMEs' long-term performance and sustainability. The studies in European Union (EU) reveal that internationally active MSMEs report employment growth of 7 per cent versus 1 per cent for MSMEs only active in domestic markets. About 26 per cent of internationally active MSMEs have introduced new products or services for their sector and in their country, compared with the average for all MSMEs, which is three times lower130. Hence, in general, exporting MSMEs outperform their non-exporting peers.

The ability of MSMEs to export is an indication of their competitiveness in global markets. Internationalization exposes firms to international best practices and strengthens the possibility of adding value through innovation by improving products, production processes, and business models. This leads to enhancement of productivity through the adoption of new technology and know-how; and supports increasing sales, employment, and growth in revenues and market share, including through offsetting or ‘smoothing’ business cycles in different markets131.

Critical success factors for market access, which means freedom to enter a market and sell goods or services,132 include but are not limited to market intelligence, capacity to learn and adapt, low entry barriers and a solid business network. Within this context, market access can generally be of two types: trade and investment. However, some policy prescriptions apply to both trade and investment. These include lowering barriers, communicating regulations and market conditions, holding trade fairs and other forms of promotional events.


130 Roland Berger Strategy Consultants (2013), What Role can Banks Play in the Internationalization Process of European SMEs’.

131 OECD (2013), ‘Fostering SMEs' Participation in Global Markets: Final Report. Paris: Centre for Entrepreneurship, SMEs, and Local Development, Organisation for Economic Co-operation and Development (OECD).

132 For further details, visit the website at Term?term=market-access.