The Impact of SME Support in Brazil

Presented by Tulio Cravo

UNU-WIDERcravo@wider.unu.edu

May 2015

The TeamJose Claudio Pires (IDB), Simon Lodato

(IDB), Saleema Vellani (IDB) and Tulio A. Cravo (UNU-WIDER)

Why do Institutions Provide Support to SMEs?

•Responsible for the majority of employment creation in developing countries

•Potential impact on social and economic outputs

Justification

• Interventions are based on the assumption that SMEs are affected by market failures and institutional constraints

Breaking the Barriers

SME- employment

- wages- exports

- innovation

Credit(matching grants)

Business Consulting

Innovation

Exports

Cluster

Missing credit markets

Asymmetric Information

CoordinationFailures and Externalities

Lack of skills

Missing market and Externalities

Breaking the Barriers

SME- employment

- wages- exports

- innovation

Credit(matching grants)

Business Consulting

Innovation

Exports

Cluster

Missing credit markets

Asymmetric Information

CoordinationFailures and Externalities

Lack of skills

Missing market and Externalities

Identification Strategy

•Quasi-experimental design•Panel data from 2001 to 2012•Construction of comparison groups:

for single interventioncombination of credit with another

intervention•Use of fixed-effect estimations

Identified Micro Data Used

RAIS (Annual Social Information Report)BNDES (Brazilian Development Bank)FINEP (Brazilian Innovation Agency)SEBRAE (Brazilian Small Business Support Service)SECEX (Secretary for External Trade)INPI (National Institute of Intellectual Property)ABDI (Brazilian Agency of Industrial Development)APEX (Brazilian Trade and Investment Promotion Agency)

Single Treatment: Impact on Employment, Wages, Exports-value Range, and Patents and Trademarks

***, **, and * denote statistical significance at the 1, 5, and 10 percent level.

Credit and Other Treatment

***, **, and * denote statistical significance at the 1, 5, and 10 percent level.

Concluding Remarks

• The results provide an initial insight about the importance of program coordination in the provision of different types of SME support

•More work should be done to uncover the complex relationships between different constraints affecting SME performance

Thank you!