Globalisation creates many opportunities for small and medium enterprises. It provides opportunities for the development of entrepreneurship, which is an important driving force for economic development.

“The decentralisation of production, which assigns to smaller companies several tasks previously undertaken by larger production interests, gives vitality and new energy to the area of small and medium-sized businesses.

In this way, alongside traditional artisans there emerge new businesses characterised by small production interests at work in modern production sectors or in decentralized activities of larger companies.”

This decentralisation of production can stimulate private ownership and entrepreneurial skills. Small businesses tend to be more flexible and can adapt quickly to changing market demands and supply situations, they can generate additional employment and help diversify economic activity and make a significant contribution to exports and trade.

They also often lead the way in innovation and high-tech businesses due to their flexibility and creativity. Some of them even grow into large businesses.

However, “many activities that yesterday required the hiring of employees are today carried out in new ways that encourage independent labour and are therefore marked by higher risk and greater responsibility.

“Work in small and medium-sized businesses, the work of artisans and independent work can represent an occasion to make the actual work experience more human, both in terms of the possibility of establishing positive personal relationships in smaller-sized communities and in terms of the opportunities for greater initiative and industriousness. In these sectors, however, there, are more than just a few cases of unjust treatment, of poorly paid and, above all, uncertain work.

“In developing countries, moreover, there has been an expansion in recent years of ‘informal’ and ‘hidden’ economic activities. This represents a promising sign of economic growth and development, but it raises many ethical and legal problems. 

In fact, the significant increase in job opportunities in the context of such activities is owed to the lack of specialisation in a large segment of the local work force and to disorderly growth in formal economic sectors.

Large numbers of people are thus forced to work under seriously distressing conditions and in situations that lack the rules necessary for safeguarding workers’ dignity. Levels of productivity, income and living standards are extremely low and often inadequate for guaranteeing to workers and their families the minimum level of subsistence.”

This highlights the need for support mechanisms which recognise the importance of Small and Medium Enterprise development to economic development and growth and therefore support the sector’s development in a manner which ensures that those affected by its successes and/or failures are not disadvantaged.

Some of these support mechanisms could include:
Governments should ensure that when they are participating in trade liberalisation initiatives, for example, multi-lateral agreements, that they seek the interest of small and medium enterprises

There should be strong, sustainable institutions providing financial and non-financial services to meet the demand of small and medium enterprises.  Sourcing and mobilising finance is often a challenge for small and medium-sized enterprises .

There should be a favourable legal and policy framework to manage and regulate globalisation and its impact on the sector.

Support for the promotion of good management and entrepreneurial skills through setting up training programmes and seminars for persons involved in small and medium businesses.
Promote the competitiveness of the sector, through, for example, technology capacity-building, and encouraging businesses to seek out niche markets.

Improved access of low-income and disadvantaged entrepreneurs (including women, young families, people with disabilities and ethnic minorities) to financial and business services for investing in enterprise.

Next week we move to Section VII, b of the Compendium “Social doctrine and the ‘new things”. 

Persons interested in purchasing the Compendium of the Social Doctrine of the Church, should contact the Catholic Commission for Social Justice, Archbishop’s House – 622-6680.