Sun.Star Economic Forum

GOVERNMENT should look after the basics like infrastructure, institutions, goods market effeciency than give subsidies to small medium enterprises (SMEs), a German expert said.

Siegfried Herzog of Friedrich Naumann Foundation shared Germany’s SME experience during the Sun.Star Economic Forum Wednesday at the Casino Espanol.

He said good infrastructure allows SMEs to grow all over the country. It also developed commercial land cheap and plentiful and lowers transaction costs which is favorable to SMEs.

Efficient property rights, independent judiciary and professional bureaucracy, decentralized administration work to promote strong SMEs, he said.

He added that strong institutions limit political patronage and a strong local government works to the advantage of SMEs.

Herzog said Germany’s anti-monopoly institutions promote competitiveness and provide efficient market for SME goods.

He added the intensity of competition reflects market openness and a strong competition policy.

Herzog said the biggest drag on competitiveness in Germany’s SME is the cooperative tradition between labor and management.

Another contributing factor to Germany’s SME is the business sophistication efficiency where family firms long-term committment play a big role.

Cluster development and combination of enterpreneurship and technical knowledge are important, Herzog said.

He added that science and engineering background key factor in innovative character of German exporters; vocational training is source of cheap SME labor.