Colombia’s Small and Medium Exporters and their Support System

Abstract

December 1994 The authors evaluate the role of dynamic small and medium-size manufacturing enterprises and entrepreneurs (SMEs) in Colombia ' s development. They also evaluate SME policy in Colombia, especially as it affects the country ' s export potential. The SME sector has received little attention from Colombia ' s policymakers despite its substantial weight in manufacturing, its importance as a seedbed for important future companies, and its demonstrated capacity to grow rapidly under favorable circumstances. After the recent shift to a more open economy, people are asking how the sector will fare under the more intense competition to come. Recent changes in Colombia reflect strong pressure from those outside the traditional elite - especially the somewhat marginalized class of SMEs - to play a greater role in the political process. The authors interviewed entrepreneurs from 124 SMEs - all of them exporters - in the garments, leather goods, and nonelectrical machinery sectors. Some had been exporting for many years; many had begun to do so only in the late 1980s. Firms typically employed up to several hundred workers but average size at start-up was small (a median of eight workers). The leather goods industry is mainly export-oriented; the other two sell mainly in the domestic market, although all but a few were exporting. Nearly three-quarters of entrepreneurs had some university training (90 percent in the machinery industry). Most exports were to nearby or easily accessible (same-language) countries. International marketing was handled mainly by the private sector, but the public sector and other nonfirm organizations play a facilitating role in that process, especially for very small firms and first-time exporters. Trade fairs have been especially useful to the leather goods and nonelectrical machinery industries. Collective support mechanisms - mainly industry associations, especially for smaller firms and the leather goods industry - have helped firms develop technological capabilities (in finishing and design, for example, workplace organization, the use of sophisticated equipment). Education and training - especially " learning by doing " - have helped improve productivity.