IGNITING INNOVATION - The role of Small and Medium Enterprises (SMEs)

In contrast to input measures, productivity growth results from intentional innovation supported by modern business administration focusing on the importance of knowledge, knowledge – spillovers and technological substitution in the process of economic growth. (See

the “Las Vegas Program for Applied SMEs and Crafts Development”, April 2012).

The new class of endogenous growth recognisesaspects ofentrepreneurshipbymodellingtheprocessofinvention and deriving the motives for invention from the microeconomic level, particularly from Small and Medium Enterprises.

2. International trends of innovation development

As a result of fast progressing globalisation, not only of international big companies but also of SMEs, innovation and technology transfer into profitable products and services are increasingly becoming a challenging task for entrepeneurs to stay competitive on their markets.

According to an analysis performed by Battelle and R&D Magazine

global R&D spending is expected to grow by about 5.2% to more than $1.4 trillion in 2012. “This advance is slightly less than the 6.5% growth seen in 2011 following the end of the global recession and accompanying R&D stimulus incentives. Most of the global funding growth is being driven by Asian economies, which are expected to increase nearly 9% in 2012, while European R&D will grow by about 3.5% and North American R&D by 2.8%. U.S. R&D is forecast to grow 2.1% in 2012 to $436 billion.

China, which became the world's second largest R&D investor in 2011, remains noteworthy as well. Driven by GDP growth, its rate of spending will remain strong in 2012. Three new emerging economies joined this Forecast in 2012: Malaysia, Indonesia, and Saudi Arabia. Starting from relatively small commitments (R&D expenditures at less than 1.0% of gross domestic product), each intends to increase its funding over the next several years to reflect the R&D ratios of more innovation-oriented economies.

This report reflects the global researcher viewpoint of R&D. The multinational respondents to this survey confirm trends reported elsewhere, including expectations of future funding constraints across all R&D sectors—government, industry, and academia—as the most critical concern for researchers. It also reveals that the U.S. and Europe continue to be the recognized leaders in a broad range of technologies such as aerospace, agriculture,, materials, and life science.”

3. How to ignite innovation by SMEs

WUSME World Union of Small and Medium Enterprises at International Conferences and on occasion of recent missions 2011 and 2012 to African Countries, e.g. in Angola, Gabon and Uganda has successfully enhanced awareness on governmental and private level that SMEs and Crafts create jobs, deliver innovation and raise productivity.

We observe still lack of evidence about the best means to energize growth and to remove the biggest barriers to faster development of SMEs in less privileged economies. WUSME, therefore, focuses on building the evidence that a new architecture is needed for the implementation of programs and actions that enhance and promote entrepreneurial growth.

On this line, WUSME recommended to establish Technology Transfer Centres in developing Countries, particularly in cooperation with European and US Intitutions and industrial partnerships and to create SME Funds for Crises Prevention and Development, funded with a CTL Currency Transaction Levy and a

small percentage of the Value added Tax (VAT) as successfully practiced in Austria since many years.

WUSME’s aims and targets to promote innovation and technology transfer in the forthcoming years will be, among others:

o Once consultative status has been obtained, e.g. at United Nations ECOSOC, UNIDO, OECD, UNESCO, WUSME will request these Organizations to build more knowledge and awareness by funding, conducting and enabling comprehensive studies and pilot projects, e.g. in the African UN Millennium Villages and other developing regions of the world.

o WUSME can certainly contribute to build a network of specialists, practitioners and policy makers focused on SMEs and Crafts development and offer this network to stakehlders and member organizations.

o Via the WUSME Internet Portal „Partnership Exchange” collaboration between Government Agencies, Universities and innovation Centres and entrepreneurs WUSME will connect people tackling similar problems so that they may share and exchange ideas t their mutual benefit.

It is important to note that Innovation is critical not just for developed countries to sustain growth, but for emerging economies and developing countries to catch up with developed countries. WUSME considers innovation not only in the context of path-breaking inventions, but also in terms of administrative and organizational changes that support technological diffusion.