Opening Statement_GS WUSME

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International Conferenceon the Foundation of

WUSME - WORLD UNION OF SMEs21. 23.04.2010 in the Republic of San Marino

Opening Statementof the General SecretaryConference Committee

Prof. Dr. Norbert W. Knoll-Dornhoff

Mr. Chairman, Honourable Secretaries of State, Excellencies,

Distinguishes Delegates, Ladies and Gentlemen,Let me start by expressing on behalf of the members of theConference Committee chaired by Dr. Gianfranco Terenzi mygratitude to the Government of the Republic of San Marino and inparticular to the honourable Secretary of State for foreign affairs, Mrs.Antonella Mularoni, for hosting this conference and for the valuablesupport in organising it together with my esteemed colleagues fromthe CESA foundation.

I also wish to thank the distinguished delegates from SME supportingorganisations from all continents for their patience, particularly whenthe date of the conference had two times to be postponed due tovarious time constraints and for not hesitating to endure the burden ofthe long and strenuous travel to San Marino.


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Whilst this conference venue, located in the beautiful and securecapital of our host country, San Marino, is a most comfortable anddelightful place, the world outside is still suffering from a number ofcrises, not only economically in their nature. Many of theachievements in recent years made to facilitate business of SMEs inthe world, to reduce poverty in less privileged economies haveseriously been jeopardised by shrinking demand for SMEs exportproducts, increasing prices for energy and food, falling commodityprices, significant reductions in foreign investment and a generalliquidity shortage. The strong interdependence among the worldseconomies made this a literally global economic crisis and human

tragedy. However, we have no reason be too pessimistic. We canalready see a light blue stripe on the horizon as economies arestarting to recover, as our entrepreneurs are again back at businesswith new grand ideas and innovations: Green industries, new wasteto energy and environment protection technologies, health carefacilities, products and services, fight against the climate change,agro-industry are only some examples of many others.

In a difficult global economic environment, it is more important thanever to put into place strong fundamentals reinforcing economicgrowth and development and it is more important than ever toestablish a global World Union of SME supporting Organisations andInstitutions as the basis for an effective and sustainable SME orientedpolicy focusing at practicable actions instead of well-intentioneddeclarations that could never really help SMEs to overcome difficulttimes and particular situations.Time is ripe for a new WUSME House !

Mr. President, Distinguished Delegates,

Now building jointly together the new house for SMEs Institutionsworld wide, that is exactly the main target of this Conference.


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You, distinguished delegates, you are the able architects andengineers of the new WUSME House and my humble self and mycolleagues as your staff members will actively endeavour to be goodconstruction workers and facilitators for our new House: Together wewill make our new home dynamically develop and prosper in thefuture.

The pillars of competitiveness and the windows with view to the future.

But which materials shall we use for our new WUSME House? Whatis the stuff economic development and prosperity is made of ?

I am now offering you to present my brief statement in 4 sections:

Section I. The Foundation (theory and values)Section II. The Pillars and Windows (Competitiveness and Ease of

Doing Business)Section III. The Rooms (Actions, in particular access to finance)Section IV. The Roof and Staircases (how shall the conferenceProceed modalities of operation)

Section I. The Foundation of our HouseEntrepreneurship theory and values


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In very simple terms, entrepreneurial theory (see paper from LouisJacques Filion, HEC, The University of Montreal Business SchoolEntrepreneurship to Entreprenology ,download:http://sbaer.uca.edu/research/icsb/1997/06.pdf )

is based on

a) The Economists

the popular belief that entrepreneurship originated from the

science of economics alone. A careful reading of the first twoauthors usually identified as the pioneers of the field - Cantillon(1755) and Say (1803; 1815; 1816; 1839) - reveals that they wereinterested not only in the economy but also in the managerialaspects of enterprises, business development and businessmanagement.

However, it was Schumpeter who really launched the field ofentrepreneurship, by associating it clearly with innovation.

Josef Alois Schumpeter(see: http://en.wikipedia.org/wiki/Joseph_Schumpeter )"The essence of entrepreneurship lies in the perception andexploitation of new opportunities in the realm of business ... it alwayshas to do with bringing about a different use of national employ andsubjected to new combinations." (Schumpeter, 1928)

If we were to summarize the main economic trends ofthought on entrepreneurship, we would probably accept thestandpoint of Baumol (1993), who proposed two categories of

entrepreneurs: the entrepreneur-business organizer and theentrepreneur-innovator.

b) The Behaviourists
http://sbaer.uca.edu/research/icsb/1997/06.pdfhttp://sbaer.uca.edu/research/icsb/1997/06.pdfhttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://en.wikipedia.org/wiki/Joseph_Schumpeterhttp://sbaer.uca.edu/research/icsb/1997/06.pdf


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One of the first authors from this group to show an interest inentrepreneurs was Max Weber (1930). He identified the valuesystem as a fundamental element in explaining entrepreneurial

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behavior. He viewed entrepreneurs as innovators, independentpeople whose role as business leaders conveyed a source of formalauthority. However, the author who really launched the contributionof the behavioral sciences to entrepreneurship was undoubtedlyDavid C. McClelland. McClelland did not define entrepreneurs in thesame way as the rest of the literature. His definition was as follows:An entrepreneur is someone who exercises control over productionthat is not just for his personal consumption. According to my

definition, for example, an executive in a steel-producing unitin the USSR is an entrepreneur." (McClelland, 1971; see also 1961:65)

The foundation of WUSME shall be the Mission Statement that hadbeen published in the homepagehttp://www.wusme.eu.tt (documents) 1 st DRAFT of 20 th May 2009.

WUSMEs Values have been formulated as follows:

QUOTE:The UNION trusts in theprinciples of freedom and responsibility ofentrepreneurs and in developing the environment and socialconditions world wide by market mechanisms and social partnership.The implementation of the principle of subsidiarity,the limitation ofbureaucratic obstacles to economic development and the protectionof free competition based on efficiency

UNQUOTE

are the main targets of theUNION.

Mr. Chairman, Distinguished delegates,

you will have noticed that I have underlined the terms whichaccording to recent findings of economic research appear to be ofparamount importance for international comparisons of economiesand the evaluation and assessment of reforms of given or new
http://www.wusme.eu.tt/http://www.wusme.eu.tt/http://www.wusme.eu.tt/


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institutions that are responsible for the development of SMEs. Theseare

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Economic Freedom and Ease of Doing (SMEs) Business Competitiveness and effectiveness of an economy as the main

prerequisite for increasing the GDP per capita (PPP) and toreduce poverty.

SME - relevant statistics and entrepreneurship research havebreathtakingly improved in the last decade.

The main sources of these data and findings are: Doing Business Reports of the WORLD BANK and the IFC (The

International Finance Corporation of the World Bank)

investigating the regulations that enhance business activity and thosethat constrain it. Doing Business presents quantitative indicators onbusiness regulations and the protection of property rights that can becompared across 183 economies from Afghanistan to Zimbabwe and over time. Regulations affecting 10 stages of the life of abusiness are measured: See Chart 1


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Source: DOING BUSNINESS REPORT World Bank and IFC


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The Global Competitiveness Reports,published by the World Economic Forum within the framework of theGlobal Competitiveness Network.

Competitiveness is been defined as the set of institutions,policies, and factors that determine the level of productivity ofa country .

The level of productivity, in turn, sets the sustainablelevel of prosperity that can be earned by aneconomy. In other words, more-competitive economiestend to be able to produce higher levels of income fortheir citizens. The productivity level also determines therates of return obtained by investments in an economy.Because the rates of return are the fundamental driversof the growth rates of the economy, a more-competitiveeconomy is one that is likely to grow faster in the mediumto long run. SMEs, as recent studies show that entrepreneurialactivity is related to growth in GDP and more specifically, it suggests

that entrepreneurs play an important part in recovering fromeconomic recessions.The pillars of competitiveness are shown in Chart 2

Source: The Global Competitiveness Report 2009 2010 (World Economic Forum )


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GEM The Global Entrepreneurship Monitor (GEM) - LeadingSponsoring Institution and Founding Institution: Babson College ,Babson Park, MA, United States

Is the worlds leading research consortium dedicatedto understanding the relationship betweenentrepreneurship and national economic development.For the past ten years GEM reports have been theonly source of comparable data across a large varietyof countries on attitudes toward entrepreneurship,start-up and established business activities, and

aspirations of entrepreneurs for their businesses.

Chart 3 Amount to start a business GEM 2009


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Section II. The Pillars (competitiveness) and

Windows (institutions) of the WUSME HouseA small case study: The ranking of your Countryby using available indexes. Doing Business Competitiveness GDP(PPP)

In order to show the current position of an economy and theirdevelopment in relation to other economies in the world, I have listedthe Countries where your Organisations are based. By using the dataof the mentioned indexes, I have linked it with the GDP (GrossDomestic Product) per capita (PPP Purchasing Power Parity inUSD). The results show, which economies and their SMEs areclimbing up the development staircase. But most crucial: Theseindexes show which economies are still stuck in the poverty trap,e.g. their GDP (PPP) stagnating on the lowest level, a clear indicationwhere urgent international help and reforms are needed.Chart 4 - Ease of Doing Business Ranking 2006 and 2010 World Bank GroupChart 4 indicates the following: The higher a bar is the more difficult itis in an economy for SMEs to do business. Some economies have


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between 2006 and 2010 effected reforms of one or more of the 10institutions and subsequently improved their ranking. In othereconomies it became more difficult for SMEs to do business.

WUSME will in future assist economies were reforms are urgentlyneeded.

Another example for diagnosing the current status of an economyrepresents Chart 5. where we have linked the Doing Business rankswith the development of GDP (PPP). It shows clearly that too manyeconomies in the world are still far behind the the rich Countries andthat the gap is over time rather widening instead of shrinking: These

less privileged economies are still stuck in the poverty trap.Mr. Chairman, Distinguished Delegates,

Let me finish this section by drawing you kind attention to recentempirical findings (Entrepreneurship and the Business Cycle,Prof. P.D. Koellinger, and Prof. A.R. Thurik , Erasmus School of Economics,Erasmus University, Rotterdam) that might fundamentally changeeconomic policy in regard to entrepreneurship and SMEs. There arepresently about half a billion entrepreneurs worldwide thatsignificantly contribute to economic growth and development. Only afew years ago leading economists stated: "Entrepreneurial activity isrelated to growth in GDP and..... If your economy is doing well, you'regoing to have a higher level of entrepreneurial activity, all else beingequal. Recent studies, however, showed that entrepreneurship onaverage across countries - is a leading indicator of the cycle andcauses increases of GDP. This suggests that entrepreneurs have anessential role in explaining business cycle dynamics. And, morespecifically, it suggests that entrepreneurs play an important part inrecovering from economic recessions.

These observations point to an important function of entrepreneurshipparticularly in times of economic recessions: an impulse ofentrepreneurial activity is typically followed by economicrecovery and a decrease in unemployment.

Chart 6


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Section III. The Rooms (Actions, in particular accessto finance)

Without rooms a house remains empty. I call the rooms of ourWUSME House Action Rooms . For this conference we intend toopen 5 of such rooms:

Action Room No.1 Access to Finance for SMEs.

Though this room will need a longer time to be ready, I recommendyou to focus on the following furnitures:

Micro-financing EIB financing for SMEs Equity capital via Initial Public Offerings

Emergency and Development Funds for SMEs: The CT Currency Transaction Levy and the SMETFED SME Trust Fund for Emergency and Development.

In the course of this conference we will have the opportunity todiscuss SME financing in more details and agree on modalities offurther procedure.

Permit me, however, to make here a few remarks regarding micro-financing:

Micro financing has proven a critical tool in the fight for survival ofSMEs in times of a crisis and for further development. Access to arange of micro finance services, savings, loans, and moneytransfers enables poor families to invest in enterprise and in betternutrition, improved living conditions, and the health and education oftheir children.

Micro enterprises and small businesses account for the major shareof the private sector and employment in many developing countries.


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As a response, IFC and German development bank KfW havelaunched the Micro finance Enhancement Facility, a short- tomedium-term facility of up to $500 million with initial contributions of$150 million from IFC and $130 million from KfW.

The MEF is expected to provide refinancing to more than 100 strongmicro finance institutions in up to 40 countries. It will support lendingto as many as 60 million low-income borrowers in many of the world'spoorest countries.

It shall be the aim of our World Union to establish an own Microfinance Institution, the SMETFED the SME Fund for Emergency and

Development. Basic funds shall derive from the proceeds of the CTL-the Currency Transaction Levy in co-operation with regional banks.See the note of the General Secretary which is published in ourhomepage. SMETFED shall also work together with FED, the EIBand other Institutions which enhance microfinancing of SMEs world wide.

My esteemed Colleagues will in the course of the Conference speakabout the following actions:

Action Room No. 2: SME University and Research Centre.Prof. Dr. Tajudin Alias, Malaysia, IUE Internattional University ofEntreprenology, Honolulu, Hawaii, USA

Action Room No. 3: Quality StandardsMr. Dennis Hughey, USA

Action Room No. 4: Consultative and/or Observer Status at UN Organizations, e.g. UNIDO, OECD, UNESCO, ILO......Mr. Robert Holtz, WASME Representative at UNESCO, Paris

Action Room No. 5 WUSME Exchange, interactive websiteMr. rn Thorvardarson, MBA, Icelan d


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Mr. Chairman, Distinguished Delegates,

we are already on the staircase of our WUSME House atSection IV. Further procedures

Our new World Union shall consist of Member Organisations,Institutions and Office Bearers. For the start and for the registration ofWUSME in San Marino we must, therefore, elect the

Steering Committee, which is the Government of WUSME 5 Vice Presidents who shall represent WUSME in the

Continents Secretary General who shall be responsible for the execution of

the Steering Committee's decisions and Working Groups to furnish our Action Rooms.

Mr. Chairman, Distinguished delegates and esteemed guests,

there are indeed strong indications for being optimistic aboutWUSME's potential for achieving our goals to be set in this

Conference. Can it be done? Yes, I am confident that success is athand.

Together we can make a difference. The difference will be driven byinnovative thoughts, actions and deeds.

Thank you for your attention.

Opening Statement_GS WUSME

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