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We generally associate small companies with service industries, such as dry cleaning and auto repair, where smallness is not necessarily a liability. But in Latin America and the Caribbean, small and medium-sized firms also dominate manufacturing. |
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The graph illustrates the impact of small- and medium-sized companies as a percent of each country's total manufacturing sector.
According to SMEstat, a new database on the region's small and medium-sized enterprises (SMEs), these smaller firms account for more than 90 percent of the manufacturing companies in most Latin American and Caribbean countries. Definitions range from companies employing 5-49 workers (Bolivia) to those with 11-250 employees (Argentina). Even when measured as a percent of total employment and production in the manufacturing sector, SMEs are dominant in the region (see graphs below). In most of the surveyed countries, SMEs account for around half of all manufacturing employment and one-third of all production. "These figures show how important the region's small enterprises are in job generation," said Jorge Roldán, head of the SMEstat project and chief economist of the Inter-American Investment Corporation, member of the IDB Group that supports small and medium-sized enterprises. "The majority of Latin America's SMEs employ less than 50 workers," he added. "In some manufacturing subsectors, particularly in the smaller countries, all companies are SMEs." Although SMEs are active in all the main manufacturing subsectors, four categories account for 71.2 percent of all SMEs in the region. They are: food, beverages and tobacco (22.9 percent); textiles, apparel and leather (18.4 percent); fabricated metal products (17.2 percent) and chemical products (12.7 percent). The SMEstat database includes figures on 150,000 companies gathered in national business surveys between 1988 and 1995. Roldán said the report focuses on manufacturing because that is the one sector for which most Latin countries have enough detailed information to allow for meaningful comparisons.
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